State companies plan Eurobonds
Three Chinese companies listed in Hong Kong and New York plan to issue Eurodollar convertible bonds worth a combined US$500 million late this year and early next year.
The issues will be the first by overseas listed Chinese companies and have sparked frenetic deal chasing among United States and European investment banks eager for access to this lucrative business.
Hong Kong-listed truck maker Qingling Motors Co plans to raise $100 million, while oil refiner Zhenhai Refining & Chemical Co hopes to raise between $100 million and $200 million.
New York-listed Huaneng Power International is also planning to raise $200 million to $300 million.
The China Securities Regulatory Commission has approved the issues.
The three companies still require clearance from the State Planning Commission and the State Administration of Exchange Control for the foreign exchange quotas.
The exact timing and terms of the three issues have yet to be decided.
The two Hong Kong-listed companies were hoping to become the first Chinese companies to list bonds on a European stock market - probably Luxembourg - towards the end of this year, sources said.
Given the larger size of the New York-listed company's issue, it was anticipated it would go to the market later than the first two, possibly early next year, they said.
The bulk of the proceeds would be used to fund the three companies' ambitious expansion plans in the run-up to 2000.
HG Asia and Merrill Lynch are the front-runners in the chase to sponsor the Qingling issue, while Barings and Morgan Stanley have been working with Zhenhai Refining to prepare its issue.
It remains unclear if Huaneng has selected any investment banks.
If the proposed issues proved to be successful, more overseas-listed Chinese state companies would follow suit, sources said.
Officials from the three Chinese state firms were not available for comment, although they had hinted they were mulling over various money-raising options.
Zhenhai Refining chairman Zhang Jiaren said last month the company would seek to raise capital through debt issues to fund the construction of its third phase, which would increase refining capacity to 12 million tonnes of crude oil by 2000.
