Yahoo Finance Asian Issuers’ Dollar Bond Sales Reach Highest in 17 Months
(Bloomberg) -- Asia Pacific dollar bond sales have surged to the highest since January 2023 this week, as companies and governments lock in historically tight spreads before they potentially climb further.
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Five firms including Japan’s Takeda Pharmaceutical Co. and Nomura Holdings Inc. priced a combined $7.9 billion of debt on Thursday, putting the week’s tally at nearly $22 billion, according to data compiled by Bloomberg. That’s the most since the first week of 2023, when issuers sold just over $25 billion.
Yield premiums on the region’s high-grade dollar bonds have ticked up from record lows this month, but they’re still at historically tight levels. This week’s issuance, occurring during the last week of the second quarter, underscore borrowers’ reluctance to wait given June’s spread widening.
The US high—grade market is seeing one of its busiest-ever years, with issuance up 25% on-year so far in 2024 to $867 billion.
The recent spurt from Asia is adding to the momentum in a market that, until June, had been in decline for a third consecutive year. Investors have shown strong demand for some recent deals — a $500 million package this week from state-controlled bad debt manager China Great Wall Asset Management Co. received orders more than seven times that amount.
“We are seeing an encouraging return to growth for APAC offshore primary markets, with some forgotten secular growth trends re-emerging,” said Owen Gallimore, APAC head of credit analysis at Deutsche Bank AG. Governments and conglomerates’ ambitious growth plans and pent-up dollar needs stemming from a low base of previous borrowing are helping to drive the rush, he said.
Dollar-bond sales by Asian borrowers had been in a funk for several years in the wake of China’s property crisis. The country’s developers had been the largest issuers of such debt. Meanwhile, the strong dollar has been a disincentive for some issuers, as borrowing in the currency would likely result in higher debt-servicing costs.
This week’s rush has been led by Japanese companies. Many of those borrowers have sizable overseas businesses where the proceeds could be used.
It’s also occurred amid a lull among US investment-grade borrowers. Overseas firms have accounted for two-thirds of such dollar-bond issuers this week.
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