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.
(China Daily August 1, 2007)
