China Overseas Land & Investment Ltd. (688) is marketing dollar-denominated debt as Gemdale Corp. (600383), Melco Crown Entertainment Ltd. (6883) and Global A&T Electronics Ltd. plan offerings. U.S. voters re-elected Barack Obama as president.
China Overseas Land, a Hong Kong-based developer, plans to sell a total $1 billion of bonds, split between 10-year and 30- year maturities, according to a person familiar with the matter. High-yield sales in Asia excluding Japan have risen by 41 percent to $1.2 billion since Oct. 29 from the prior two-week period, according to data compiled by Bloomberg. Gemdale, the third-largest real estate developer listed on the Shanghai stock exchange, casino operator Melco Crown and Global A&T Electronics have hired banks to meet investors.
“Obama’s victory will probably bring on a risk-on sentiment,” said Glenn Hodgeman, the Sydney-based global head of credit trading at Westpac Banking Corp. “There is a good chance that credit spreads will tighten.”
Yields on Asian non-investment grade notes, rated Ba1 or lower by Moody’s Investors Service, fell to a record low of 6.13 percent yesterday, according to HSBC Holdings Plc indexes. Obama defeated Republican challenger Mitt Romney to win a second four- year term. Obama had captured 303 Electoral College votes, beyond the 270 needed to win the White House.
China Overseas Land is offering $700 million of 10-year securities at a yield premium of between 235 basis points and 240 basis points more than Treasuries, and $300 million of 30- year debt at a spread of 255 basis points to 260 basis points, the person said, who asked not to be identified because the terms aren’t final.
Gemdale hired HSBC and JPMorgan Chase & Co. to arrange meetings with investors in Hong Kong and Singapore from tomorrow, another person familiar with the matter said. Melco Crown is expected to sell $825 million of eight-year notes while Global A&T Electronics is looking at a $625 million sale of six- year bonds.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell one basis point from yesterday’s close to 113 basis points as of 5:26 p.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show.
The Markit iTraxx Australia index rose one basis point from yesterday’s close to 138 as of 4:18 p.m. in Sydney, according to Australia & New Zealand Banking Group Ltd. That’s up from 136 as of 11:47 a.m., ANZ prices show.
The Markit iTraxx Japan index decreased 6 basis points to 194 from yesterday’s close as of 6:22 p.m. in Tokyo, Citigroup Inc. prices show. The gauge has ranged from 168.5 to 229.5 this half, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
Credit-default swap indexes are benchmarks for protecting 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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