Mongolia is meeting investors from today to discuss a possible dollar-denominated bond sale, as closed markets in the U.S. for Thanksgiving prompted Asian issuers to pause. Bond risk fell.
The North Asian country, which was the world’s fastest- growing economy last year, hired five banks to arrange the meetings, a person familiar with the matter said yesterday. Asia-Pacific dollar note sales this week total $1.8 billion, compared with $3.9 billion last week, according to data compiled by Bloomberg. Asia debt risk is poised to close at the lowest level in more than two weeks, according to prices from Westpac Banking Corp. (WBC) and data provider CMA.
Mongolia, an exporter of coking coal, is seeking to raise as much as $5 billion from bonds and loans for rail and power projects, Vice Economy Minister Chuluunbat Ochirbat said last month. The extra yield Asian companies pay over Treasuries to sell dollar debt fell for the first time in more than two weeks yesterday, according to HSBC Holdings Plc indexes.
Mongolia is “in a pretty sweet spot, if you’re looking at it from a resource standpoint,” said Brayan Lai, a desk analyst in emerging market credit trading at Jefferies Group Inc. in Singapore. Mongolia will likely be flexible on timing given less constraints around required funding, he said.
Kookmin Bank will also consider a capital markets transaction after meetings in Singapore, Hong Kong and London next week, a person with knowledge of those details said.
Financial markets in the U.S. are closed today for the Thanksgiving holiday.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid two basis points to 118 as of 8:11 a.m. in Hong Kong, Westpac prices show. The gauge is on track for its lowest close since Nov. 7, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Australia index fell one basis point to 139 as of 11:23 a.m. in Sydney, according to Credit Agricole SA. (ACA) The benchmark is poised for its fourth consecutive day of decreases, according to CMA.
The Markit iTraxx Japan index dropped two basis points to 176 as of 9:11 a.m. in Tokyo, Westpac prices show. The measure is set for a sixth day of declines and the lowest close since Sept. 14, according to data provider CMA.
Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.