Railway construction bonds valued at a minimum of 16 billion
yuan (US$2 billion) are to be issued by China's Ministry of
Railways to raise finance for network expansion projects. The size
of the issue could increase to 20 billion yuan if there's over
subscription, states the prospectus published in Thursday's
China Securities Journal.
The bond maturity periods are seven, 10 and 20 years and they
carry an annual interest rate of between 4 and 4.25 percent. The
bonds are being underwritten by CITIC Securities Limited.
Projects to be financed by the bonds include a high-speed rail
linking Beijing and the city's nearest seaport Tianjin and a passenger-only line between
Zhengzhou, capital of central China's Henan Province and Xi'an, a major tourist
center in neighboring Shaanxi Province.
Under China's 11th five-year plan (2006-2010) the rail
network will be extended by 17,000 kilometers at an estimated cost
of 1.25 trillion yuan.
As the ministry's monopoly over railway operation bars any
meaningful participation of private investors much of the funding
comes from bank loans and bonds. In September the ministry signed
an agreement with the China Development Bank, a state-owned policy
bank, for a 250 billion yuan loan over the next five years.
(Xinhua News Agency October 13, 2006)