China's Ministry of Railways (MOR) on Tuesday auctioned 30 billion yuan (4.74 billion U.S. dollars) worth of bonds in an attempt to finance the country's cash-starved railway construction.

The bonds, which are the third of its kind this year, are divided into two categories: 15 billion yuan of seven-year paper and 15 billion yuan of 20-year paper.

The interest rate of the seven-year paper is 4.63 percent, while that of the 20-year is 5.22 percent.

The issuance immediately attracted investors as the Ministry of Finance had earlier halved the tax on the interest earnings of bonds issued by the MOR between the 2011-2013 period, in a bid to make the bonds more attractive.

Due to China's tightening monetary policy, the railways ministry faces pressure to clear debt and resume halted projects.

According to the ministry's report, the MOR's outstanding debt totaled 2.23 trillion yuan by the end of September, which poses significant pressure for the ministry as debt payments peaked in the fourth quarter.

To ease the situation, the MOR issued two batches of bonds in October.

"The frequent issuances are partly because the peak time has arrived for the ministry to pay debt, partly because it is in urgent need of cash to resume halted projects," said Li Jianfeng, a senior analyst with Caida Securities Co.

The MOR said last week that it will pay off some of its creditors before Nov. 20 to ensure funding for railway projects that are currently under construction.