Toll-road operator and property developer Road King Infrastructure plans to raise about US$300 million from a bond sale, triggering a credit downgrade from international ratings agencies. Market sources said Road King planned to sell US$200 million of seven-year, fixed-rate notes and US$100 million of five-year floating-rate notes. The bonds were expected to be priced on Friday after a roadshow. JP Morgan and DBS are arranging the sale. Moody's Investors Service downgraded Road King's credit rating one notch to Ba2, or two steps below investment grade, on the news of the sale yesterday as the property business was more cyclical than toll roads. It assigned a Ba2 rating to the new bonds with a negative outlook. Standard & Poor's also lowered its rating by one notch to a similar 'BB'. 'While Road King still enjoys stable recurring cash flow generated from its diversified portfolio of toll-road projects across China, the Ba2 rating better reflects its heightened financial and operational risks, as property development is significantly more cyclical than toll-road operations,' said Renee Lam, a senior analyst at Moody's. 'Besides, Road King's ability to manage a property operation at such an expanded scale is untested.' Greentown China Holdings, a property developer based in Zhejiang province, carries a similar Ba2 rating from Moody's. In November last year, the company sold bonds with a yield of 7.782 per cent that mature in 2013. By comparison, Road King's debt maturing in 2011 yields 6.969 per cent. 'Greentown yields a whole lot better than existing Road King bonds, which are 70 to 80 basis points tighter, so they need to come with something closer or close the gap substantially before I get interested in this bond,' said one bond fund manager. Road King said in January it would double to HK$1.8 billion its investment in Sunco Binhai Land. That would boost Road King's stake in the company to 95 per cent. The acquisition doubles Road King's property portfolio to six million square metres in gross floor area. The deal prompted Standard & Poor's and Moody's to put their credit ratings of Road King on review for a possible downgrade in January. Road King's shares dropped 1.65 per cent yesterday to close at HK$13.10. They are up 13.91 per cent this year. The Hang Seng Index is up 1.77 per cent by comparison.