SINGAPORE, July 30 (IFR) - New high-yield issues in Asia rallied as strong bids from investors were seen across the Chinese property segment, following an upgrade of Country Garden.
Standard & Poor’s upgraded its rating on real estate developer Country Garden to BB+ from BB Monday. “The upgrade was a surprise and, although there is a debate it was warranted, it prompted buyers for Chinese property paper to emerge,” said one high-yield trader.
CoGard bonds gained today with its 2021s quoted at 7.25 percent.
KWG Property rode on the rally, pricing a $400m 5NC3 bond last night to yield 8.25 percent at par. It was a smart move because the bonds gained on the break, trading as much as 75 cents to a dollar. In late afternoon, the bonds were quoted at 100.75/101.00.
The bullish sentiments spilled over to Modernland’s new bonds, which traded up a point on thin volume. Demand was seen mainly from private banks.
Of the three high-yield offerings yesterday, Olam was the only one that stumbled on the break. The unrated 5.5-year bonds, sold at a reoffer of 99.337 yesterday, sank to 98.50/98.70 in the morning before some buying was seen to bring them up to 99.00.99.375 in the afternoon.
The broader market was steady with a slightly soft tone as some retail profit-taking was seen as prices strengthened.
In the high-grade cash bonds, Chexim 2024s were at 117bp/114bp over Treasuries, inside reoffer spread of 120bp, and the 2019s were at 94bp/91bp, wider from reoffer spread of 90bp.
China Gold 2017s were quoted at 287bp/283bp, still above reoffer of 275bp, while Huarong 2019s were at 223bp/220bp, inside reoffer of 235bp.
Asian credit spreads were weaker in contrast to the stronger cash bonds. The iTraxx Asia IG index was out 2bp at 103bp-104bp, still range-bound within 99bp-105bp seen during the past two months. MANDATES CMB plans to meet fixed-income investors in Hong Kong and Singapore from tomorrow for a potential offering of senior USD-denominated Reg S notes. The notes, if issued, will be in the name of Airvessel Finance Holdings, a wholly owned subsidiary of China Merchants Bank. CMB has ratings of BBB+ from S&P and Baa1 from Moody‘s.
ANZ, HSBC, Morgan Stanley and UBS are joint global co-ordinators, with CMB International Capital, Credit Suisse and Wing Lung Bank as joint bookrunners and joint lead managers.
Orix Corp plans to meet investors from next Thursday for a potential offering of a US dollar-denominated 144A/Reg S bond. Bank of America Merrill Lynch and Morgan Stanley will accompany the issuer to Hong Kong on August 7 and Singapore the next day.
The roadshow will continue on to Boston on August 12 before heading to New York and Philadelphia on August 13. The offering, subject to market conditions, could come at a tenor of either 3, 5 or 10 years.