Poly Property Dollar Bonds Gain After Busiest Day in Two Weeks

Poly Property Group’s debut dollar-denominated bonds rose today after the Chinese developer priced its offering on the busiest day for U.S. currency debt sales from Asia in two weeks.

Poly Property’s notes, which priced at par, rose as high as 101.4 cents on the dollar as of 12:11 p.m. in Hong Kong, according to prices quoted by Royal Bank of Scotland Group Plc. Five companies from Asia outside Japan sold securities in the U.S. currency yesterday, the most offerings in a single day since April 25, data compiled by Bloomberg show.

Chinese companies led issuance, accounting for 77 percent of the $2.47 billion raised, the data show. China Railway Construction Corp. and Poly Property borrowed $800 million and $500 million respectively, while Want Want China Holdings Ltd. priced $600 million of notes in its first dollar issue. China’s real estate developers are on track to meet their sales targets for 2013 after a strong first quarter, Standard & Poor’s wrote in a report today.

“We haven’t seen any sign of indigestion yet and therefore, in the near-term, even when there’s more supply to come, I think the market should be able to absorb it,” said Agnes Wong, a credit strategist at Nomura Holdings Inc. “Our base case is that yields will continue to grind tighter, especially for those higher-yielding papers.”

Interest rates on debt from the world’s second-largest economy fell to 5.39 percent yesterday, near the lowest level since the end of February, according to JPMorgan Chase & Co. indexes.

Bond Demand

Poly Property, a first-time U.S. currency issuer without a credit rating, sold five-year debt to yield 4.75 percent, data compiled by Bloomberg show. Investors placed orders for about $6.7 billion of notes, with asset managers buying 65 percent of the bonds, a person familiar with the matter said today.

The cost of insuring corporate and sovereign bonds against non-payment in the Asia-Pacific region excluding Japan rose, credit-default swaps show.

The Markit iTraxx Australia index gained 1 basis point to 99 basis points as of 10:31 a.m. in Sydney, according to National Australia Bank Ltd. prices. The measure, which has ranged from 96.1 to 127.5 this year, is on track to rise for a third consecutive day, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 1 basis point to 100.5 as of 8:40 a.m. in Singapore, Westpac Banking Corp. prices show. The benchmark is headed for a second daily increase, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Japan Risk

The Markit iTraxx Japan index dropped 2 basis points to 75 basis points as of 9:29 a.m. in Tokyo, according to Deutsche Bank AG prices. The gauge is trading at the lowest level in five years, 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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