Ministry of Railways to issue largest amount of bonds

By Li Zengxin (chinadaily.com.cn)
Updated: 2006-10-20 09:04

The Ministry of Railways will issue a bond this month, named the Railway Construction Bond, as its first array of such bonds in 2006, worth 16 billion yuan (US$2.02 billion), the largest issuance of a single corporate bond in history.

If the initial tranche is sufficiently over-subscribed, another four million yuan may be added on top of the 16 billion yuan as an over-allotment issuance. This is the first time an over-allotment mechanism has been adopted in railway corporate bond issuance. Other innovative methods include reverse-allocation options and online and off-line dual channels to cater to both institutional and individual investors.

The Ministry of Railways received a bond issuance quota of 40 billion yuan for this year. Of the October issuance, bonds of 1 billion yuan have a maturity term of seven years, 5 billion yuan will mature in ten years, and 10 billion yuan in 20 years. Face annual interest rates for the three types are, 4 percent (fixed), 4-4.1 percent (floating) and 4.15-4.25 (floating), respectively. The floating rates will be set based on the book-keeping archive set-up positions.

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The full text is available in the October Issue ofChina Banking.

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