Country Garden to sell debt for bond buy-back

Guangdong-based developer Country Garden Holdings plans to issue senior notes to buy back convertible bonds and finance property projects in its second debt-selling exercise this year.

The developer proposes to issue notes with a five-year maturity so it can repurchase its outstanding convertible bonds due in 2013 and pay the construction costs and land premium on existing and new projects.

In April, the company issued senior notes with a seven-year maturity to buy back 4.3 billion yuan (HK$4.93 billion) worth of convertible bonds.

Guangzhou-based KWG Property Holdings announced a similar plan earlier.

David Ng, head of regional property research at the Royal Bank of Scotland, said mainland developers were eager to issue bonds as they needed capital to replenish their land banks. 'With the weak mainland property market sentiment, many developers have no confidence in achieving their sales targets in the second half. If they are seeking financing, then the bond market is a better choice compared with the stock market,' he said.

'The appetite of investors for bonds is growing. Bonds issued by several mainland developers previously offered a yield of more than 10 per cent, which is attractive to investors and why it is easier for developers to raise funds in the bond market.'