Asia-Pacific companies and governments’ sales of dollar bonds in the primary market hit a nine-month high this week, as issuers look to lock in historically tight spreads before they climb further.
The South Korean government and other issuers sold more than US$5.5 billion ($7.46 billion) of notes on Wednesday, pushing the week’s tally close to US$14 billion, according to data compiled by Bloomberg. That is already the most for any week since September of last year, the data show.
Yield premiums on the region’s high-grade dollar bonds have ticked up in the last month, but are still near their historically-low levels. This week’s activities underscore borrowers’ reluctance to wait to issue new bonds, given the recent trend of premiums heading back up.
The US high-grade market is seeing one of its busiest-ever years, with issuance up 23% on-year so far in 2024 to almost US$859 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 the raft of deals with some — such as one by state-backed bad debt manager China Great Wall Asset Management Co. — recently being more than seven times subscribed.
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The rapid pace of deals on consecutive days is reminiscent in some ways to when the market was at its height several years ago when Chinese borrowers dominated before the nation’s property crisis. But this week’s rush is being led by non-Chinese issuers, with Japanese companies accounting for close to 30% of the deals.
Chart: Bloomberg
