Bloomberg News

Minmetals Land Plans Dollar Bond Sale After Borrowing Costs Drop

April 15, 2013

Minmetals Land Ltd. (230) is planning to sell dollar-denominated bonds after premiums on Asian debt in the U.S. currency tumbled last week amid record issuance.

The real-estate developer plans to meet investors in Hong Kong, Singapore and London from today to discuss the offering, according to a person familiar with the matter who asked not to be identified because the details are private. San Miguel Corp. (SMC) also hired banks to arrange investor talks, another person said.

Dollar bond sales in Asia outside of Japan surged to a record $8 billion last week with the Republic of Indonesia and China National Petroleum Corp. leading issuance, according to data compiled by Bloomberg. Spreads narrowed 7 basis points to 277, the biggest weekly rally since the period ending Jan. 4, according to JPMorgan Chase & Co. indexes.

“Supply will come thick and fast so we need to make sure deals get priced at market-clearing levels,” said Tim Jagger, a Singapore-based fixed-income portfolio manager at Aviva Investors Asia Pte, which managed $282 billion of debt assets globally as of September. “We’re going to get more supply out of the Chinese state-owned enterprise space for sure. And some of the larger benchmark China property names haven’t come out yet.”

Minmetals Land’s senior notes will be issued by unit Minmetals Land Capital Ltd. and will include a keepwell deed from China Minmetals Corp., which controls the company, the person familiar with the matter said.

Credit Risk

A keepwell deed is an agreement whereby the parent company of an issuer promises to maintain the borrower’s solvency while stopping short of guaranteeing payments.

San Miguel, the largest Philippine food and drinks company, will meet fixed-income investors in Singapore and Hong Kong from tomorrow after hiring Australia & New Zealand Banking Group Ltd. (ANZ), Bank of America Corp., DBS Group Holdings Ltd., Deutsche Bank AG and Standard Chartered Plc, the person familiar with that matter said.

San Miguel President Ramon Ang didn’t immediately reply to mobile-phone messages today, seeking comment on any sale.

The sale would be the first for the company since raising $600 million from convertible bonds two years ago, data compiled by Bloomberg show. San Miguel is also marketing a $1.3 billion five-year loan in general syndication, a person familiar with the matter said last week.

The cost of insuring corporate and sovereign bonds in the region fell 7.9 basis points last week, the most in more than a month, according to data provider CMA.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan advanced 1 basis point to 115 basis points as of 8:51 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its highest close since April 10, according to CMA.

Japan, Australia

The Markit iTraxx Japan index increased 2 basis points to 91 as of 9:44 a.m. in Tokyo, according to Citigroup Inc. prices. The benchmark has fallen 68 basis points this year and is trading near lows last seen in November 2010, according to Citigroup and CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Australia index was little changed at 111 basis points as of 10:16 a.m. in Sydney, according to National Australia Bank Ltd. prices. The benchmark has ranged from 102.3 basis points to 127.5 basis points since Dec. 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.

To contact the reporter on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net

To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net


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