Cracks Widen in Parts of Asian Credit as Issuers Pull Debt Sales
(Bloomberg) -- A surge in bond yields is bleeding into Asian markets where at least two state-backed Indian companies and three Japanese firms pulled planned debt sales.
Indian Railway Finance Corp. and National Cooperative Development Corp. withdrew rupee note offerings Thursday. NCDC said it had done so after the coupon rate at which bids were received was higher than it had anticipated. In Japan, Santen Pharmaceutical put off a yen bond sale that it had planned to price Friday, after two other issuers there also paused deals in recent days.
A jump in the 10-year Treasury yield -- the global bond benchmark -- to a one-year high is sending shockwaves through markets. Global credit markets have stumbled in one of their worst weeks this year, with Asian junk bond prices extending their drop this week to the worst since October.
For now, many companies are still sitting on ample piles of cash to weather such volatility after record bond issuance in most markets last year and even through recent weeks in 2021. But any quickening in the pace of yield increases ahead would raise more concern.
In India’s case, financing costs have also been pressured up after the government last month announced bigger-than-expected borrowings, fueling concern that companies will get crowded out of debt markets. Rupee corporate bond yields surged the most since 2013 in February and local note issuance plunged to a 19-month low of 504.6 billion rupees ($6.9 billion).
Attention now turns to companies planning to seek bids for local-currency notes on Friday: National Highways Authority of India, LIC Housing Finance and Housing Development Finance Corp.
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