Bankers are waiting for a bond deal to re-open the market after the August hiatus - with hopes pinned on the Korean sovereign, which could tap the market as early as Wednesday, according to people close to the situation.
With US non-farm payrolls due to be reported on Friday, that leaves a brief window for deals to print this week. The Korean sovereign had held roadshows in June but put its deal on hold due to volatile markets.
It is under pressure to print a deal, to set up a benchmark for other Korean issuers looking to tap the bond market. Spreads for Korean issuers have also held up better than other parts of Asia.
"They are open to issuing anything from a five-year bond to a 30-year bond," said one person familiar with the situation. Citi, Deutsche Bank, Goldman Sachs, HSBC, KDB Securities and Woori had arranged roadshows.
Also in the sovereign space, Republic of Indonesia concluded roadshows for its dollar sukuk last week. Citi, Deutsche Bank and Standard Chartered were the arrangers.
However, the country is grappling with an outflow of funds and a depreciating currency. Like India, Indonesia has been badly hit by the exodus of funds from emerging markets. Recent data has also not helped: Indonesia's trade deficit widened to a record $2.3 billion in July, worse than expected.
“The trade numbers aren’t really helping and the bonds are not part of the JACI [JP Morgan Asia Credit Index], but the deal could see demand from Middle Eastern investors,” said one Singapore-based investor.
September is likely to be a volatile month, with the Fed's tapering measures causing volatility in US Treasury yields -- as a result investors are likely to stay selective. "We will participate in deals selectively and keep our powder dry," the Singapore-based investor added.
A number of borrowers are on the road. Industrial and Commercial Bank of China (Asia) starts investor meetings in Singapore, Hong Kong and London on Wednesday. According to a source, the bank is eyeing a US dollar tier 1 Basel III bond.
“We haven’t seen much Basel III bonds from Hong Kong or China banks, so I think there would be interest," said the Singapore-based investor.
ICBC Asia became the first Asian bank to tap the market with a Basel III bond in 2011, but it issued in the offshore renminbi bond market, raising Rmb1 billion.
A total of 11 banks -- ANZ, Bank of America Merrill Lynch, Citi, Credit Agricole CIB, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, ICBC, Royal Bank of Scotland and UBS -- are arranging roadshows. ICBC Asia is rated A2 by Moody's and A by Fitch.
Chinese conglomerate Avic International concludes roadshows in Singapore, Hong Kong and London for a potential US dollar debut on Wednesday. BOCI International and Royal Bank of Scotland are joint global coordinators and bookrunners. Credit Suisse and HSBC are also joint bookrunners. The bonds are expected to be rated Baa3/BBB-/ BBB.
Philippines' port operator ICTSI is expected to close an offer to investors to exchange existing $450 million senior bonds due 2020 for a new 12 year bond on Friday. Citi and Credit Suisse are the joint arrangers. Also, from the Philippines, Manila Electric is in the midst of roadshows, arranged by Citi.
Elsewhere, Sri Lanka's National Savings Bank concluded roadshows to US, Europe and Asia on Tuesday. Barclays, Citi and HSBC were the arrangers.
