CIFI Holdings Markets First Dollar Bonds From China This Month
The Hong Kong-listed developer of Chinese homes and offices is considering pricing five-year bonds in the low-to-mid 11 percent range, according to a person familiar with the matter, who asked not to be identified because the details are private. Japan’s Mitsubishi UFJ Lease & Finance Co. also plans to sell dollar notes, a separate person said. The cost of insuring corporate debt from non-payment in Asia was unchanged, according to Credit Agricole SA (ACA) prices.
CIFI Holdings, which is based in Shanghai, would be the first Chinese issuer to sell securities in the U.S. currency since Hainan Airlines Co. raised $500 million at the end of January, according to data compiled by Bloomberg. China stopped short of imposing fresh measures to control price rises yesterday while urging local authorities to “decisively” curb real-estate speculation. Standard & Poor’s said earlier yesterday the outlook for the country’s real-estate industry had improved.
“CIFI has some trust loans to repay, plus all developers are looking to expand in 2013,” according to Agnes Wong, a Hong Kong-based credit analyst at Nomura Holdings Inc. “This is just opportunistic as the market is still sort of open.”
The builder plans to use proceeds from the bonds to refinance existing debt, acquire new projects or land, develop existing projects in China and for general corporate purposes, or just for the latter, according to a person with knowledge of the details.
Mitsubishi UFJ Lease is marketing five-year bonds at about 145 basis points more than similar-maturity Treasuries, a separate person said. Japanese companies have sold $3.15 billion of dollar debt this week, the most since the five-day period ending Jan. 11, according to data compiled by Bloomberg.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 108 basis points as of 8:25 a.m. in Hong Kong, according to Credit Agricole prices. The benchmark has fallen 5.4 basis points this year, according to data provider CMA.
The Markit iTraxx Japan index increased 2 basis points to 124 as of 9:11 a.m. in Tokyo, Citigroup Inc. prices show. The measure is set to pare its drop this year to 35 basis points, according to prices from CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Australia index climbed 1.5 to 114.5 as of 11:08 a.m. in Sydney, according to Westpac Banking Corp. (WBC) prices. The benchmark has ranged from 111.6 to 127.5 this year, according to CMA.
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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