Glorious Property Mulls Dollar Bond as S&P Raises Sector Outlook

Glorious Property Holdings Ltd. is considering selling dollar-denominated debt after Standard & Poor’s said the outlook for the Chinese real-estate sector had improved. Asian bond risk fell.

The developer, founded by Chinese billionaire Zhang Zhi Rong who resigned as chairman in November, plans to meet investors in Hong Kong tomorrow and in Singapore on Feb. 22 to discuss a possible note sale, according to a person familiar with the matter. S&P revised its outlook on China’s residential property market to stable from negative to reflect financing and operating conditions for the next six to 12 months, the company said in an e-mailed statement today.

Glorious Property would be the 24th developer from Hong Kong and China to sell dollar debt this year after issuers raised $9.2 billion in January, data compiled by Bloomberg show. Beijing seems unlikely to introduce tougher measures to cool the real-estate market even as it maintains controls, according to S&P. A gauge of Asian bond risk is set for its lowest close in more than three weeks, according to traders of credit default swaps.

“Many of the new bond proceeds will be used for refinancing,” Bei Fu, a Hong Kong-based credit analyst at S&P, said on a conference call today. “We are quite relieved to see that many of the developers seem to be more realistic in terms of their expectation of the market and of their balance-sheet management.”

Asia Risk

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 1.5 basis points to 108.5 basis points as of 8:12 a.m. in Hong Kong, according to Australia & New Zealand Banking Group Ltd. prices. The benchmark is set to close at the lowest level since Jan. 28, according to data provider CMA.

Standard & Poor’s assigned Glorious Property’s planned bonds a B- rating, according to a separate report today. Despite a weak capital structure, the company’s sales, property delivery and profit margin are likely to improve amid new project starts and better market conditions, the report said.

Zhang, the company’s former chairman, quit about five weeks after an investment firm he controlled agreed to pay $14 million to resolve U.S. insider-trading claims. His decision had nothing to do with the case, iPR Ogilvy in Hong Kong, which handled Zhang’s public relations, said in an e-mailed reply to Bloomberg News questions at the time.

CIFI Holdings Group Co., a developer of hotels and homes in China, is due to complete investor meetings in London today, a person familiar with the matter said last week.

Default Swaps

The Markit iTraxx Japan index fell 2 basis points to 123 basis points as of 9:09 a.m. in Tokyo, Citigroup Inc. prices show. The measure is set to drop 12 basis points this month, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index retreated 1.5 basis points to 112.5 as of 11:06 a.m. in Sydney, according to Westpac Banking Corp. prices. The gauge ranged from 111.6 to 127.5 this year, CMA data show.

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.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE