Chinese Developers Market Dollar Bonds as Asia Debt Risk Rises
Beijing Capital Land Ltd. (2868) and Greentown China Holdings Ltd. (3900) are offering the first dollar- denominated bonds from China’s real estate developers in two weeks. Debt risk in the Asia-Pacific region rose.
Beijing Capital is marketing a perpetual note to yield in the high 8 percent area, a person familiar with the matter said, asking not to be identified because the details aren’t set. Hong Kong-listed Greentown is offering an increase to its existing 8.5 percent bonds due February 2018, a separate person said.
Developers from China and Hong Kong, which raised $12.3 billion from dollar securities this year, have been absent from the market since Kaisa Group Holdings Ltd. (1638) sold $550 million of notes on March 12, data compiled by Bloomberg show. Many lenders have started to control the scale of loans for real estate development to coordinate with new property curbs, the China Securities Journal reported today, without saying where it got the information.
“It’s possible that Chinese developers will stage a comeback,” said Annisa Lee, a Hong Kong-based credit analyst at Nomura Holdings Inc. The issuers have “decent” cash on hand, which will constrain any rebound in issuance, she said.
Beijing Capital is selling the first undated dollar bond from Asia since Petron Corp. (PCOR) added $250 million to a line of perpetual notes on March 7, Bloomberg-compiled data show.
Borrowers from Asia outside of Japan priced $2.3 billion of debt yesterday in the busiest day since Jan. 29, according to the Bloomberg-compiled data.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 2 basis points to 120 as of 8:00 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark, which has ranged from 100.5 to 120.8 since Dec. 31, is set for its highest close since March 22, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Australia index increased 3.5 basis points to 121.5 basis points as of 11:05 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The measure, which rolled to a new series on March 20, is set for its highest close since Feb. 4, according to data provider CMA.
The Markit iTraxx Japan index climbed 2 basis points to 109 as of 8:55 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge has ranged from 101 to 148.1 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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