November 22, 2008

Baoshan to sell up to CNY 10 billion in bonds

Bloomberg reported that Baoshan Iron & Steel Co will sell up to CNY 10 billion in six year bonds on June 20th 2008 to help pay for the acquisition of a plant from its parent.

The Shanghai based company Baoshan said in a statement, the bonds with call warrants carry an interest rate of between 0.8% and 1.5%. The final rate will be decided based on the bond subscription.

Mr Fu Zhongzhe president of Baoshan said China is encouraging companies to issue bonds to reduce reliance on bank loans and provide investors with an alternative to the nation's stock market. Baoshan aims to buy more assets from parent Baosteel Group Corp to boost earnings.

Baoshan said it will use proceeds from the bond sale to help buy assets including a steel plate plant for as much as CNY 14.3 billion to meet rising demand from shipbuilders. It will pay Baosteel over five years for the plant which has an annual capacity of 1.6 million tonnes.

Citic Securities Co is the main underwriter for the sale.