SGX to target first US dollar bond in acquisition campaign
The Singapore Stock Exchange (SGX) is forecasting an initial dollar bond offering, which would make it the latest in the rush of Asian companies to lock in cheap borrowing costs.
The city-state’s single stock exchange has hired banks for a possible U.S. banknote and was scheduled to hold investor calls since yesterday, said a person familiar with the matter, who asked not to be identified because the no one is allowed to talk about it.
The exchange, which posted a decline in its last annual profit in part due to rising costs, has expanded its fixed-income, currencies and indexes business through acquisitions while diversifying into equities. Spending will remain high as it continues to invest in growth, CFO Ng Yao Loong said in an earnings briefing earlier this month.
Driven by the acquisition of MaxxTrader and potentially more M&A activity, SGX’s revenue growth could be driven by market data, connectivity and indices, as well as fixed income, currencies and commodities, Bloomberg Intelligence analyst Sharnie Wong wrote in an Aug. 10 note.
The stock market is not the only borrower poised to enrich the Asian pipeline with US dollar bonds. China Merchants Bank has also hired banks for a potential offering of sustainability and green ratings. Still, the primary market was muted yesterday, with only one company marketing its deal.
Borrowers have so far sold more than US $ 254 billion (S $ 345 billion) of dollar bonds in Asia, excluding Japan, this year, and are on track to approach the record high. about 346 billion US dollars last year, according to data compiled by Bloomberg. Performance premiums on the region’s quality dollar banknotes fell below 126 basis points on Monday, a level last seen in February of last year.
The primary dollar bond market remained quiet yesterday, with ABC International Holdings marketing the only deal.
The lack of activity comes as investors await the Jackson Hole Symposium later this week, a key event that could provide insight into how the Federal Reserve plans to cut bond purchases.
Among the transactions not denominated in dollars, the UOL group seeks to establish the price of an offer of debt at seven years in Singaporean dollars.
Spreads on high-quality dollar bonds from Asia, excluding Japan, narrowed by about a basis point, credit traders say, putting them on track for a seventh day consecutive tightening.
The Markit iTraxx Asia ex-Japan CDS high-quality bond index fell 0.5 basis points, according to credit default swap traders. The gauge is ready for a fifth consecutive day of decline, according to CMA data. Sentiment was bolstered last week by a government-backed bailout from China Huarong Asset Management.
Still, the bailout has sparked differing opinions between Moody’s Investors Service and Fitch Ratings. Sales of new issues of secured loan bonds in the United States set a monthly record of around $ 16.6 billion, according to data compiled by Bloomberg News.
U.S. government agencies, including the Treasury, Federal Reserve, and Securities and Exchange Commission, are concerned about reports that non-financial firms are not offered loans tied to the London Interbank Offered Rate, or Libor, of alternatives.