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BIZCHINA / Center
First corporate bond lined up
By Wang Lan (China Daily)
Updated: 2007-08-01 09:38
China Yangtze Power, which owns and operates the power plant of the
160-billion-yuan Three Gorges Dam Project, is preparing to issue the
first corporate bond in China, a source said.
Several other fast-growing companies listed on the Shanghai and Shenzhen
bourses are also making preparations to raise fresh capital directly from
investors through bond issues, market sources said.
Their enthusiasm to tap this new source of capital was triggered by the
China Securities Regulatory Commission's announcement in June that it had
begun drafting rules on corporate bond issues. Until now, only a handful
of State-owned enterprises had been allowed to issue bonds approved by
the National Development and Reform Commission.
"The launch of corporate bonds would help encourage the issuing companies
to improve their operations and management because the cost of raising
capital in the bond market is largely based on the asset values and the
credit ratings of the issuing companies," said Lian Mengke, a bond
analyst with Haitong Securities in Shanghai.
China Yangtze Power, the country's leading power generating company,
based in Yichang of Central China's Hubei Province, is reportedly
planning to issue bonds totaling 8 billion yuan. Further details of the
issue remain unavailable.
"We are in the preparation stage and things change all the time," said
the source. "There's nothing more I can say at this time."
Bond experts and analysts said corporate bonds would create a more liquid
long-term capital market that can better reflect the true cost of
capital. The introduction of corporate bonds would help bring yields more
in line with market forces.
Nie Wen, an analyst with Industrial Securities, said the launch of
corporate bonds would allow more domestic companies to gain access to the
long-term capital market.
(For more biz stories, please visit Industry Updates)
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