Shui On Markets Dollar Debt After Spreads Narrow for Second Week

Shui On Land Ltd. is marketing dollar-denominated bonds after debt costs for Asian borrowers in the U.S. currency fell for a second consecutive week.

The Shanghai-based developer controlled by Hong Kong billionaire Vincent Lo plans to sell perpetual notes yielding about 10.5 percent via one of its units, a person familiar with the matter said. The average yield premium on Asian dollar bonds fell 4.6 basis points last week to 265.1 basis points more than Treasuries, an HSBC Holdings Plc index shows.

Prospects for China’s property developers are improving as the region’s largest economy, which appointed new leaders last month, reports data showing manufacturing gained in November while house prices increased for a sixth month. Asian bond risk rose today after U.S. Treasury Secretary Timothy F. Geithner and House Speaker John Boehner hardened their positions over the fiscal cliff, ahead of data that may show U.S. employers added about half as many jobs in November as the prior month.

The Chinese data is “a good boost to this week’s trading, as it reinforces the point we’re seeing a post-leadership changeover recovery,” said Owen Gallimore, a Singapore-based credit trading desk analyst at Australia & New Zealand Banking Group Ltd. While positive data will encourage companies to sell bonds, investors are expected to be cautious ahead of U.S. employment figures and uncertainty about the so-called fiscal cliff, he added.

U.S. politicians are struggling to avert more than $600 billion in tax increases and spending cuts that are slated to come into force next year.

Bond Risk

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose one basis point to 111.5 as of 8:40 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark slid to 111.4 on Nov. 30, its lowest since July last year, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Shui On is selling its perpetual notes, which the company can repurchase after five years, via unit Shui On Development Holding Ltd., said the person familiar with the matter, asking not to be identified because the details are private.

Deutsche Bank AG, JPMorgan Chase & Co., Standard Chartered Plc and UBS AG are managing the sale, the person said.

China’s official Purchasing Managers’ Index, a gauge of the manufacturing industry, was 50.6 in November, the highest in seven months, data released by the National Bureau of Statistics and China Federation of Logistics and Purchasing on Dec. 1 showed.

House prices gained 0.26 percent in November, rising for the sixth month, SouFun Holdings Ltd., the country’s biggest real estate website owner, said in an e-mailed report today.

Japan Risk

The Markit iTraxx Japan index dropped two basis points to 164 as of 8:58 a.m. in Tokyo, Deutsche Bank AG prices show. The gauge is headed for its lowest since April 9, according to CMA.

The Markit iTraxx Australia was little changed at 130 as of 10:48 a.m. in Sydney, after declining last week to its lowest level since March, according to ANZ and CMA prices.

Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.

The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.

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