Asia bonds, specifically speculative grade debt, related exchange traded funds can see higher yields as issuers pay more to raise cash requirements.
“I would say, the start of 2014 looks very different from 2013,” Viktor Hjort, head of Asia fixed-income research at Morgan Stanley, said in a Wall Street Journal article. “[Borrowers] are forced to pay up in yields, or new issue premium, to attract investors. That’s 180 degrees different from almost no new issue premium 12 months ago… .”
Due to diminished loan demand coupled with tougher capital requirements, issuers will have to pay higher premiums, or higher interest rates, to bring in investors. [Outflows From Asian Bond Funds Slow a Bit]
Big Chinese property developers Guangzhou R&F Properties Co. and Kaisa Group Holdings Ltd. announced large high-yield bond sales in Asia Monday.
In the dim-sum bond market – Chinese yuan denominated bonds issued outside mainland China, Export-Import Bank of China is expected to issue 4 billion yuan, or $661 million, in offshore bonds later in January, and the Agricultural Development Bank of China is also expected to sell dim-sum bonds later this week.