Bloomberg News

China Overseas Land Plans Bond Sale; Obama Wins U.S. Presidency

November 07, 2012

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 Meetings

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.

Default Swaps

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.

To contact the reporters on this story: Tanya Angerer in Singapore at tangerer@bloomberg.net; Rachel Evans in Hong Kong at revans43@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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