-- Hong Kong & China Gas Co., the piped- gas supplier controlled by billionaire Lee Shau-kee, said it plans to sell dollar bonds to fund expansion and refinance debt.

The company's first dollar bond sale, to be sold by a unit of the company, will be in one or more tranches, and guaranteed by Hong Kong & China Gas, the company said in a statement to the Hong Kong Stock Exchange late yesterday.

Hong Kong & China Gas is seeking to tap demand from pension funds and insurance companies for high-grade securities as concern mounts that losses at banks will rise and credit woes deepen because of the slowing global economy and accelerating inflation.

``I am sure the company can sell. This kind of credit provides pricing stability when investors are battling with volatility everyday,'' said Arthur Lau of JF Asset Management Ltd. in Hong Kong, which oversees $128 billion of assets. ``It's a very stable credit. People are likely to buy and hold onto bonds from this kind of company, so their post-deal performance tends to be a lot less choppy.''

Lau said Hong Kong & China Gas plans to sell the ``benchmark'' size deal maturing in 10 and 30 years. ``Pension funds and insurance companies will love this type of long-dated bonds,'' he said. A benchmark-size bond sale typically means at least $500 million.

Meeting Investors

Hong Kong & China Gas hired HSBC Holdings Plc and Morgan Stanley to arrange meetings with investors in Singapore and Hong Kong tomorrow, in London on July 29 and the U.S. from July 28 to July 30, according to an e-mail sent to investors.

Standard & Poor's rates the proposed senior unsecured fixed- rate notes A+, the fifth-highest investment grade. Moody's Investors Service has a comparable A1 ranking for the bonds.

Hong Kong & China Gas, also known as Towngas, has a monopoly in the Hong Kong market with more than 1.6 million commercial, industrial and residential customers, reaching more than 65 percent of households, S&P said in a statement today.

Expansion in China will increase the risk profile of the company, the rating assessor said.

The 146-year-old company, Hong Kong's first public utility, has invested in property and mainland gas and water projects to counter slowing fuel sales in the city.

`Flat' Gas Sales

``We expect gas sales to be flat in the next few years, as a decline in residential customers offsets growth in gas sales to the commercial and industrial sectors,'' S&P said in the statement.

The company's 2007 profit jumped 58 percent to HK$9.27 billion ($1.2 billion), bolstered by sales of properties and a one-time gain from acquiring a stake in Panva Gas Holdings Ltd., now known as Towngas China Co., Hong Kong & China Gas said on March 26.

The company's net income for the first four months of this year fell 53 percent to HK$1.93 billion, according to the statement last night. The stock fell 0.6 percent to HK$17.78 at 11:32 a.m. in Hong Kong.

Hong Kong & China Gas had HK$4.8 billion of cash at the end of 2007, while debt maturing within one year was HK$3.4 billion, according to S&P.

The spread, or extra yield investors demand above U.S. Treasuries to buy the $300 million 6.25 percent bonds of CLP Holdings Ltd., rose 3 basis points to 187 at 10:00 a.m. in Hong Kong, according to BNP Paribas SA's prices. The spread of the securities maturing in 2012 reached a record high of 265 basis points on March 10. A basis point is 0.01 percentage point.

The bonds were priced to yield 105 basis points above the U.S. benchmark when sold in April 2002, data compiled by Bloomberg show.

The debt of CLP, Hong Kong's biggest power utility, is rated A- by S&P and A2 by Moody's.