Vanke Co. (stock code: 000002),  the nation's biggest publicly traded developer, plans to sell about 2 billion yuan ($264 million) of bonds, ushering the first wave of offerings after the government eased rules to expand the debt market, two people with knowledge of the transaction said.

Vanke hired Citic Securities Co., China's biggest publicly traded brokerage, to arrange a bond sale, said the people, who asked not to be identified before an announcement by the company. The bonds will no longer require a bank credit guarantee, conforming to the government's new rules.

The new rules will make debt sales easier after Chinese companies sold four times more stock than bonds in the first half of the year. The nation's corporate bond market has lagged behind the $2.8 trillion stock market because government restrictions made it harder for non-state companies to sell debt.

"In the first two years, the bond market will still be small compared with the stock market," said Qu Qing, a bond analyst in Shanghai-based Shenyin& Wanguo Securities Co. "After that, it will gradually surpass the stock market."

Shang Fulin, chairman of the China Securities Regulatory Commission, wants to widen companies' financing channels. The stock-market regulator, which now has the power to approve debt sales by publicly traded companies, published the final rules yesterday.

The rules allow companies whose shares are traded on either domestic or overseas exchanges to sell bonds. The guidelines canceled a requirement for companies to seek bank guarantees for bonds they sell.

Interest rates on debt sold by state-owned companies were subject to approval rather than determined by market conditions. Due to the bank guarantees on the issuance, investors typically regarded the corporate debt as being quasi-government bonds.

Awaits Approval

Vanke's plan to sell bonds hasn't received the regulator's approval yet. Industrial & Commercial Bank of China (stock code: 601398), the nation's biggest bank, may advise the company, the people said.

Zheng Jing, a Beijing-based spokeswoman for Citic Securities, declined to comment. Zhang Tingfen, a spokeswoman for Vanke in Shenzhen, didn't answer calls to her office phone.

Bonds to be sold by Chinese companies in accordance with the new rules will carry a face value of 100 yuan, with maturities of more than one year. The price should be decided by the company and the underwriter after gauging investor demand for the securities, according to the rules.

Strict Guidelines

Strict guidelines imposed by the National Development and Reform Commission, the nation's top economic planner, meant approvals to sell debt were mostly restricted to major state- owned companies. Companies in the world's fastest-growing economy raised 35 billion yuan selling bonds in the first half of this year, compared with 123.7 billion yuan from share sales, according to the central bank.

The Chinese government said it will put in "great effort" to develop a corporate bond market, according to an Aug. 11 statement published on its Web Site.

China Yangtze Power Co. (stock code: 600900) plans to sell 8 billion yuan of bonds domestically to buy generators, Caijing magazine reported last month, without saying where it got the information. The bonds will be sold over two years, according to the Beijing-based magazine.