Investment-grade bonds from Asian issuers are receiving more attention from U.S. investors looking for value, according to dealers. In recent weeks, Malaysian Shipping and Export Import Bank of India have sold dollar-denominated securities and market professionals expect other Asian issuers will take advantage of this demand in the coming weeks and months. "We should expect a wave of issuance between now and late August or September, and the U.S. market will be receptive to new credits. If I were an Asian issuer, I'd look at the likely rate cycle in the U.S. and come to market sooner rather than later," said John Woods, global head of credit research and strategy at HSBC.
Investors are canvassing for Asian credits now because they offer discounts to similarly rated U.S. high-grade assets, according to one salesman in New York. "Export Import Bank of India's paper was trading at 185 basis points above five-year Treasuries. If it were a U.S. issued credit it would trade around 130-140 bps, so it's cheap," he said.
Woods agreed that Asian credits currently offer good value. "Aside from the Philippines and Indonesia, there are actually few sovereigns that are sub-investment grade, [yet] the region is perceived as an emerging market," he noted.