Chinesepod - Yangtze Power to issue nation's first corporate bond

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BIZCHINA / Center

Yangtze Power to issue nation's first corporate bond

By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-09-19 13:52

China Yangtze Power Co Ltd, which owns and operates the 160-billion-yuan
Three Gorges Dam Project power plant, will issue the nation's first
corporate bond as early as tomorrow, the China Securities News reported
today.

The power giant will sell four billion yuan (US$533.33 million) 10-year
bonds with a fixed interest rate, a source said.

Ten percent of the corporate bond, or 400 million yuan, will target
personal investors, the source said.

China Construction Bank is offering an unlimited and irrevocable
guarantee for the issuance.

Yangtze Power said the raised money will be used for refunding 3.5
billion yuan in borrowing, and the rest will be added to the company's
circulating capital.

Meanwhile, more than 10 listed companies, including Gemdale Corporation
and Offshore Oil Engineering Co Ltd, have announced their corporate bond
issuance plans.

In addition, China Chengxin Securities Appraisal Co Ltd has obtained
approval from the China Securities Regulatory Commission (CSRC) to act as
China's first corporate bond rating institution.

Tu Guangshao, vice chairman of the CSRC, said last week that time is ripe
for the launch of corporate bonds and furthermore, the interest rate hike
expectations won't affect the trial issuance of bonds.

According to a rule released by the CSRC to guide the issuance of
corporate bonds last month, only companies listed overseas and on the
Shanghai and Shenzhen exchanges are allowed to issue corporate bonds.

Currently, only a handful of large State-owned enterprises approved by
the National Development and Reform Commission can issue such bonds. The
price and amount of bonds issued are decided by the commission, and the
State commercial banks are also required to underwrite the bonds.

Just 283.1 billion yuan of corporate bonds had been issued by the end of
last year, accounting for only 1.35 percent of gross domestic product,
far lower than the 40 percent in the United States and 17 percent in the
Republic of Korea.

(For more biz stories, please visit Industry Updates)

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