Mitsubishi UFJ Leads Biggest Asia-Pacific Bond Sales

Mitsubishi UFJ Financial Group Inc.’s bank unit led Asia-Pacific borrowers that sold $176.3 billion of bonds this quarter, the most in at least a decade, as investor demand for investment-grade debt returned.
New issues almost doubled from the same period last year, with Citigroup Inc., HSBC Holdings Plc and Barclays Capital managing a third of all sales in dollars, euros and yen for the region outside Japan, according to data compiled by Bloomberg.
Bank of Tokyo-Mitsubishi UFJ Ltd. sold 450 billion yen ($4.7 billion) of 2.75 percent notes in Japan’s biggest sale of corporate bonds, while Commonwealth Bank of Australia raised A$2 billion ($1.4 billion) from 4.5 percent, state-backed notes. South Korean steelmaker Posco raised $700 million from the region’s first non-guaranteed corporate dollar sale of the year.
“Most new deals are doing very well and liquidity is coming back,” said Arthur Lau, a Hong Kong-based fund manager with JF Asset Management Ltd., which oversees $128 billion. “Volatility has fallen because many hedge funds, which tend to engage in short-term trading, are being replaced by buy-and-hold, real money accounts such as banks. Fund managers are more than happy to invest in very, very high quality issuers.”
Asian corporate borrowers’ dollar bonds returned 4.4 percent this year after losing 13 percent in 2008, according to JPMorgan Chase & Co.’s Asia Credit Index. Borrowers are tapping demand for corporate debt after yields relative to government bonds fell more than 100 basis points from a record 953 basis points on Oct. 29, according to the Asia Credit Index.