Glorious Property Markets Dollar Notes as Asian Bond Risk Falls

Glorious Property Holdings Ltd. is marketing a sale of U.S. dollar-denominated notes as bond risk across the Asia-Pacific region falls.

The developer, founded by Chinese billionaire Zhang Zhi Rong who resigned as chairman in November, is offering five-year securities at about 13.25 percent, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set. The cost of insuring corporate bonds against non-payment dropped in Asia, Japan and Australia, according to credit-default swap traders.

Glorious Property’s bonds would be the first by a Chinese issuer in the U.S. currency this month, according to data compiled by Bloomberg. The sale comes after authorities in Beijing on Feb. 20 urged local authorities to “decisively” curb real-estate speculation. CIFI Holdings Group Co., a Hong Kong-listed developer, canceled a planned note sale last week citing unfavorable market conditions, four people with knowledge of the details said at the time.

“Glorious Property’s proposed deal should provide a litmus test for the market,” said Mark Reade, a Hong Kong-based credit desk analyst at Credit Agricole CIB. “That’s especially the case given this morning’s weak Chinese manufacturing data and the overhang of Italian election results.”

Economic Headwinds

China’s manufacturing is expanding at the slowest pace in four months, HSBC Holdings Plc and Markit Economics said in an e-mailed statement today following a preliminary reading of their Purchasing Managers’ Index, underscoring the headwinds faced by policy makers in the world’s second-biggest economy. Italians are meanwhile awaiting the results of the presidential election.

Chinese issuers pay an average 5.34 percent for dollar debt, 23 basis points more than at the end of last year, according to JPMorgan Chase & Co. indexes as of Feb. 22. The rate dropped 7 basis points last week. Asian yields have risen 19 basis points in 2013 to 4.23 percent, the indexes show.

The Markit iTraxx Japan index fell 2 basis points to 122.5 basis points as of 9:09 a.m. in Tokyo, according to Deutsche Bank AG prices. The gauge declined last week for an 11th straight week and reached as low as 117.3 on Feb. 13, the least since July 2011, according to data provider CMA.

Credit Risk

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 1 basis point to 108.5 as of 8:22 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is on course to drop 7.7 basis points in February, CMA prices show.

The Markit iTraxx Australia index dropped 1.5 basis points to 114 as of 9:55 a.m. in Sydney, Westpac Banking Corp. prices show. The benchmark is down from 127.5 at the beginning of the year, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

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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