China Railway to issue RMB 4 billion five-, 10-year bonds Wednesday

By Marisa Wong

Morgantown, W.Va., Jan. 26 – China Railway Group Ltd. said it will issue RMB 4 billion of corporate bonds on Wednesday.

The company plans to issue two types of bonds. The proposed amount of each type is RMB 2 billion. The base amount may be reallocated between the two types, and there is no limit on the reallocation proportion. Whether the reallocation option will be exercised will be determined following a book-building process.

The deal will also include a RMB 1 billion over-allotment option. The lead underwriters will decide whether to exercise the greenshoe according to the results of an off-line subscription.

BOC International (China) Ltd., UBS Securities Co., Ltd., China International Capital Corp. Ltd. and China Merchants Securities Co. Ltd. are the lead underwriters.

The type 1 bonds will have a maturity of five years, and the type 2 bonds will have a term of 10 years.

Both types of bonds will be issued at par. The interest rates for the type 1 and type 2 bonds are expected to be 2.3% to 3.3% and 3.3% to 4.3%, respectively. The exact coupons will be set through the book-building.

For the type 1 bonds, the company will be able to adjust the coupon at the end of the third year, at which time investors will have a put option.

Proceeds will be used to supplement working capital.

The construction group is based in Beijing.

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