The primary US dollar bond market in Asia overflows with deals. The surge of deals this time was the busiest since the invasion of Ukraine. There are as many as seven successful pricings. One of them is Korea Electric Power Corp’s $800m of dual-tranche green deal. The purchase was on the back of $7.1bn. Bankers agree that a lot of issuers have been watching the market for a while. So, the success and overflowing orders for the Kepco trade drives the confidence. This trade comprises 10bp of premium in the following day.
Currently, there have been high-grade Asian issuers paying double digit new issue premiums. It could be 20bp or even more. The epitome is in Indonesia. The Indonesian government has paid a 30bp of premium for its US dollar sukuk. Based on Revinitif data, Asia ex-Japan G3 issuance jumped at 30% to $160bn. This is only around 271 issues compared with 406 the same with last year. A Hong Kong based banker argued that recently the investor’s sentiment has been improving.
However, many banks remain cautious about being the first to enter the gate.
This is because there have been small deals since the beginning of the year. Moreover, the deal has gotten worse since the Russian invasion of Ukraine. In the beginning of 2022, there had been eight U.S. dollar deals from Asian issuers on January 11 and 20. Unfortunately, since the invasion of Ukraine, a number of deals have been canceled. The major cause that gives hindrances to the deal flows is geopolitical concerns.
Central banks even tighten some rules, making most investors and issuers hesitate to enter the deals. As a result, most high yield markets have been shit. There is also a spate of defaults from some of China’s property sector on lower-rated credits. The first week of June is like a gate to what the market is actually waiting for. The market sentiment is slowly stabilizing, deal overflows in the US dollar bond.
