Bonds News
- Yangtze Power first to sell bonds after reform
Date: 11-Sep-2007 Sources: (Shenzhen Daily)
CHINA Yangtze Power Co. will sell 4 billion yuan worth of 10-year bonds at the end of September, in the first bond offering since regulators instituted reforms in the corporate bond market.
The government implemented new rules on corporate bond issues last month, paving the way for market-determined bond rates. Previously, the central bank set corporate bond coupons.
The government has made it a priority to speed up the development of the immature corporate bond market to help broaden financing channels for domestic firms.
Yangtze Power, the listing vehicle of the Three Gorges Dam project, has received approval from the China Securities Regulatory Commission (CSRC) for the bond issue, a person familiar with the deal said yesterday.
Yangtze Power has yet to disclose an offer price for the bond, but the issue will include an option for investors to sell the bonds back to the company in September 2014.
The power producer said last month it plans to sell 8 billion yuan worth of corporate bonds with a maturity of between five and 10 years. The company will use the proceeds of the bond to repay bank loans and supplement working capital.
The remaining 4 billion yuan (US$529.11 million) worth of bonds will be sold by year-end at the earliest, said the person.
The new rules on bond issues transferred oversight of listed companies' bond sales to the CSRC from the National Development and Reform Commission. Before the reforms, China's economic planning agency had been in charge of all corporate bond sales.
Under the new rules issued by the CSRC, listed companies can determine the bond issue price based on market conditions.
The rules also state that a listed company's total outstanding corporate bonds must be capped at 40 percent of their net assets and the annual interest a company pays to its bondholders should be less than its annual net profit during the previous three years.
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