Property developer Ho Bee Investment Ltd. is planning to fund its expansion into the property market in China by selling bonds for the first time.
Ho Bee, along with Yanlord Land Group Ltd., acquired a residential development site in Shanghai for 3.82 billion yuan or US$560 million in February, and on Wednesday, it set up an S$800-million or US$580-million of multicurrency medium-term note programme.
“The interest-rate environment is in our favour and the active bond market bodes well for us,” said Desmond Woon, Ho Bee’s executive director of finance. He added that the notes will likely be denominated in Singapore or US dollars and will have tenors of three to five years.
Last year, private home sales in Singapore were just below the 2007 record, driven by the country’s economic recovery. In China, property prices surged 12.8 percent in April compared with the previous year, the fastest on record, as the central government tries to implement several measures to cool down the property market. According to recent data, Singapore dollar bond sales totalled S$7.2 billion this year compared with S$3.4 billion over the same period last year.
Mr. Woon said that Ho Bee’s “land bank is very low” and the note programme gives the company the ability to move fast and take advantage of any acquisition opportunities.
“Bilateral bank loans can take two to three months, this way we can access funds much more quickly,” he said, adding that the company is monitoring the property market and if concerns surrounding the Greece debt crisis dissipate, Ho Bee can move “very soon”.