CHINA Yangtze Power Co, which said yesterday it had gained regulatory approval to issue corporate bonds on the Shanghai Stock Exchange, is set to be the first mainland-listed firm to launch such debt.
Yangtze Power, which operates the world's biggest hydropower project at the Three Gorges Dam, will issue four billion yuan (US$530 million) of the 10-year bonds on Monday, it said in a Website statement.
The bonds are part of a plan by Yangtze Power to float up to eight billion yuan in corporate debt on the Shanghai bourse within 24 months. The debt is rated AAA by China Chengxin International, it said.
The proceeds of the corporate bond sale will be used to repay debt and shore up working capital at Yangtze Power, according to the statement.
About 10 percent of the bonds by Yangtze Power will be sold to retail investors with the remainder going to the institutional tranche, the Oriental Morning Post said yesterday, citing unnamed sources.
Trial basis
China last month allowed public firms to issue corporate bonds on a trial basis in a long-awaited move to expand their fund-raising channels and bolster the fledgling debt market.
Chinese companies listed in Shanghai, Shenzhen or overseas will be allowed to sell corporate bonds with maturities of more than a year. These firms don't need bank guarantees for their debt sales and can use the proceeds to repay loans, among other purposes.
Previously, the National Development and Reform Commission, China's top economic planning agency, was in charge of vetting applications by domestic companies to issue debt of more than a year.
But the issues needed bank guarantees and were largely limited to the big state-owned enterprises under its control, which could only use the proceeds in designated investment projects.
Under the new regulatory arrangement, the NDRC will still be in charge of approving sales of bonds with maturities of more than 12 months by non-listed government-held enterprises.
About 20 public companies on the mainland, including China Vanke Co and Huaneng Power International, have also announced plans to issue corporate bonds since early August, according to earlier company statements.