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Business / Companies

Drugs giant plans bond sale to repay debt

(China Daily) Updated: 2012-09-05 09:59

Sinopharm Group Co, China's biggest drugs distributor, is planning its largest-ever bond sale to repay more-expensive loans and fund expansion in a healthcare market forecast to triple in size this decade.

The issue of as much as 8 billion yuan ($1.3 billion) of debt maturing in up to 10 years follows an 80 basis point drop in the Shanghai-based company's 2014 notes this year to 4.13 percent, according to Chinabond.

While that's less than the central bank's 6 percent benchmark rate for one-year loans, it's more than the 2.22 percent average for US pharmaceutical bonds, a Bank of America Merill Lynch index shows.

Healthcare spending in China will almost triple to $1 trillion annually by 2020, driven by an aging population and government efforts to broaden insurance coverage, according to a McKinsey & Co report released last month.

The government has pushed Sinopharm, Shanghai Pharmaceuticals Holding Co and Jointown Pharmaceutical Group to expand by buying smaller competitors, part of steps designed to reduce the price of drugs for China's 1.37 billion population.

China Daily-Agencies

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