PT Lippo Karawaci Tbk (LPKR), Sun Hung Kai Properties Ltd. (16) and Shimao Property Holdings Ltd. (813) are marketing dollar-denominated bonds after the busiest week for U.S. currency sales by Asian real-estate companies since September.
Lippo Karawaci, Indonesia’s largest publicly traded developer by assets, plans to sell as much as $130 million more of its existing 6.125 percent bonds due November 2020, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set. Sun Hung Kai and Shimao are also marketing debt, people with knowledge of the details said, after Asian real-estate companies sold $1.25 billion of notes last week, the most since the seven-day period ending Sept. 14, according to data compiled by Bloomberg.
Country Garden Holdings Co. and Kaisa Group Holdings Ltd., both based in Guangdong province in southern China, priced dollar bonds in Asia last week after a three-week pause amid year-end holidays. The cost of insuring regional corporate and sovereign notes from default is at the lowest level in two years, according to traders of credit-default swaps.
“Funding costs in the U.S. dollar bond markets for Chinese property developers are at their lowest point in a long time,” said Krishna Hegde, the Singapore-based head of Asia credit research at Barclays Plc. “It makes sense for these companies to refinance their debt or term out maturities.”
Asian borrowers paid an average 4.06 percent to sell dollar-denominated bonds as of Jan. 4, near the record low of 3.94 percent reached on Nov. 29, according to a JPMorgan Chase & Co. index.
Lippo Karawaci is marketing its notes at 104.25 to 104.375 cents on the dollar, a person familiar with the matter said. Sun Hung Kai is offering 10-year bonds at a spread of 180 basis points to 185 basis points more than Treasuries, said a person familiar with the matter. Shimao, whose projects include the five-star Shanghai Hyatt on the Bund, plans to sell seven-year bonds yielding about 6.75 percent as soon as today, a separate person said.
Westpac Banking Corp. is also planning a dollar debt sale, marketing a three-year note at 60 to 65 basis points more than Treasuries, and five-year securities at 80 to 85 basis points more than Treasuries, according to a person with knowledge of the matter.
Export-Import Bank of India is marketing 10-year dollar bonds at about 240 basis points more than U.S. government debt, according to a separate person with knowledge of the deal.
Country Garden raised $750 million from a sale of 10-year bonds on Jan. 3 while Kaisa sold $500 million of seven-year debt, data compiled by Bloomberg show. Sino Land Co., CapitaLand Ltd., Road King Infrastructure Ltd. and Kaisa raised $1.5 billion in the week ending Sept. 14, the data show.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 101.5 as of 1:03 p.m. in Hong Kong, according to Royal Bank of Scotland Group Plc. The gauge is on course for its lowest close since January 2011, according to data provider CMA.
The Markit iTraxx Australia index slid 0.5 basis point to 113.5 as of 11:32 a.m. in Sydney, Westpac Banking Corp. prices show. The benchmark is set for its lowest close since July 2011, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Japan index fell 5 basis points to 144 basis points as of 2:05 p.m. in Tokyo, Citigroup Inc. prices show. The measure is on track for its lowest level since March 19, 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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