China Overseas Grand Markets Dollar Bond After Xi’s Reform Plans

China Overseas Grand Oceans Group Ltd. is marketing a U.S. dollar-denominated bond amid optimism China’s economic reforms will boost growth in the world’s second-largest economy.

The developer, a unit of China Overseas Land & Investment Ltd., is offering five-year notes at about 350 basis points more than Treasuries, according to a person familiar with the matter, who asked not to be identified because the details are private. Chinese issuers’ borrowing costs fell to a one-week low of 6.02 percent yesterday, according to JPMorgan Chase & Co. indexes.

President Xi Jinping’s reforms, which may be the most sweeping since Deng Xiaoping’s liberalization in 1978, are aimed at giving more influence to market forces and loosening state controls. The changes outlined include allowing more private investment in state-run industries, easing the one-child policy and expanding farmers’ land rights.

“Many industries will benefit as the reforms are a good blueprint for the long-term economic growth of China,” said Steve Wang, a Hong Kong-based head of fixed-income research at BOCI Securities Ltd., a unit of Bank of China Ltd. “There are also other positive factors in the market,” such as expectations that U.S. tapering will remain delayed, Wang said.

Monetary Stimulus

New York Federal Reserve Bank President William C. Dudley yesterday said the U.S. central bank’s monetary stimulus is likely to be accommodative for a long time even as he’s “getting more hopeful” the economy is gaining strength.

The Federal Open Market Committee won’t taper its asset purchases until its March 18-19 meeting, according to the median estimate of 32 economists surveyed by Bloomberg News Nov. 8.

The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment increased, according to traders of credit-default swaps.

The Markit iTraxx Australia index rose 1 basis point to 103 basis points as of 12:20 p.m. in Sydney, according to Citigroup Inc. The gauge, which declined the previous four trading days, is set for its highest close since Nov. 14, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 1 basis point to 130 as of 9:21 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The benchmark, which fell 2.5 basis points last week, the most since the five days ended Oct. 18, is on track for its highest close since Nov. 15, 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 climbed 0.5 of a basis point to 83.3 basis points as of 10:18 a.m. in Tokyo, Citigroup prices show. The gauge is poised to fall 7.4 basis points from Oct. 31, 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. A basis point is 0.01 percentage point.

— With assistance by Tanya Angerer

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