HONG KONG: Asia's international dollar-based corporate bond market is expected to spring back to life following Malaysian oil giant Petronas's $6 billion debt deal - the biggest in the region since the coronavirus hit - bankers and advisers say.
Dollar bond market sales in the region have significantly lagged the United States, where bankers say the Federal Reserve's fiscal stimulus package has led to increased credit purchases.
Since the start of March, there has been $431 billion worth of corporate bonds sold in the United States compared to just $31.5 billion in Asia, including Japan, according to Dealogic figures.
"The rate of issuance in Asia has been modest but the signs are good, hopefully markets are starting to come back," a debt banker who worked on Petronas said, but could not be named because he was not authorised to speak to the media.
"Issuers are starting to look at whether they can go ahead with a deal, the amount of phone calls we are taking is certainly more than it was a few weeks ago."
A Hong Kong-based lawyer said it was increasingly likely Asian companies would step up U.S. dollar issuance in the next few months, especially to repay upcoming debt maturities.
Petronas's deal was finalised early on Wednesday and saw the state oil company raise $2.25 billion from a 10-year tranche, $2.75 billion in 30-year notes and $1 billion from 40-year notes.
It was the company's first bond deal in five years and a government statement said the transaction attracted demand from investors to buy at least $37 billion worth of debt.
The U.S. dollar deal is the largest from an Asian company since the coronavirus started to roil financial markets following the Lunar New Year, in late January, according to Dealogic.
Lenovo Group, the Chinese owned technology company, is meeting with investors on the prospect of carrying out a U.S. dollar bond deal in the next few days, a term sheet seen by Reuters says.
However, some companies remain wary of volatile market conditions, market participants said.
"U.S. dollar funding is cheap at the moment, rates have been slashed, it's a good time to be locking it in, but you still see some companies in this region nervous," said the lawyer who was not authorised to speak to media. - Reuters
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