UPDATE 1-China Country Garden shares jump on bond issue plan

(Adds analysts comments, update share price)

HONG KONG, Feb 18 (Reuters) - Shares of Country Garden Holdings (2007.HK: Quote, Profile, Research, Stock Buzz) briefly leapt about 15 percent on Monday after the Chinese property developer announced plans to raise $500 million via convertible bonds, bolstering investors' confidence in its fund-raising ability.

Country Garden said it will issue 3.595 billion yuan ($500.8 million) worth of convertible bonds due 2013, fully underwritten by Merrill Lynch, with an initial conversion price of HK$9.05 per share.

"This gives the market a positive signal, but we have to wait until the second quarter for more hints on whether Beijing will further tighten its macro-economic control," said an analyst at a U.S. brokerage.

Sources had said last Friday that Country Garden planned to issue $500 million yuan-denominated convertible bonds to finance land acquisitions amid Beijing's clampdown on lending to the real estate sector.

The stock rose to a high of HK$7.73 in early morning trade, before retreating to HK$7.28, up 8.5 percent. But it has dropped about 49 percent from its September peak of HK$14.18 following China's tight monetary policy and efforts to cool the property market.

"We believe Country Garden is using this fully-underwritten convertible bond to refinance existing loans, buy back shares, lock in stable borrowing costs, minimize equity dilution and test market sentiment in preparation of later financing," UBS said in a research note on Monday.

Country Garden also entered into an equity swap to buy back US$250 million of its shares, leading to an effective equity issue price of around HK$14 upon future CB conversion, it added.

For company statement please see here UBS maintained its buy rating for the stock with a target price of HK$14. (US$1=HK$7.8=7.178 yuan) (Reporting by Donny Kwok and Alison Leung, editing by Ken Wills)