Agile Property of China Plans $400 Million Bond Sale

Agile Property Holdings Ltd., a homebuilder in the southern Chinese province of Guangdong, plans to sell as much as $400 million of bonds, according to an e-mail sent to investors.

The property developer is promoting the sale to investors in Singapore, Hong Kong, London and in the U.S. from Nov. 5 till Nov. 13, the e-mail shows. HSBC Holdings Plc is arranging the sale.

Agile Property joins Foshan, Guangdong province-based Country Garden Holdings Co. in selling debt to expand in China, where housing prices in 70 major cities had the biggest recorded increase in September. The risk of owning Chinese property developer's debt rose yesterday on concern that Country Garden's record $1.5 billion bond offering will drive up borrowing costs.

Credit-default swaps on Agile Property bonds rose by 20 basis points to 345 basis points at 10:15 a.m. in Singapore, according to BNP Paribas SA. Each basis point, or 0.01 percentage point, on a contract protecting $10 million of debt from default for five years adds $1,000 to the annual cost.

Credit-default swaps are financial instruments based on bonds or loans that are used to speculate on a company's ability to repay debt. They were conceived to protect bondholders by paying the buyer face value in exchange for the underlying securities should the borrower default.

Agile Property last sold dollar-denominated bonds in September last year, when it raised $400 million. The extra yield, or spread, on the 9 percent bonds maturing in 2012 has risen to 460 basis points, from about 426 basis points more than Treasuries when the securities were sold on Sept. 15, 2006, according to prices from Merrill Lynch & Co.

The Chinese developer is rated Ba3 by Moody's Investors Service, three levels below investment grade, and one level higher at BB by Standard & Poor's.

predicstockmove.com