China Gas slashing its yuan debt
China Gas Holdings, one of the largest piped-gas suppliers on the mainland, will slash its exposure to yuan debts in anticipation of more interest rate rises.
Managing director Liu Minghui said the group aimed to have 50 per cent of debt in yuan and the other half in US dollars by the end of next year. The central bank unexpectedly raised interest rates on bank lending and deposits by 25 basis points last week. China Gas yesterday reduced its HK$8.84 billion worth of yuan loans by about HK$3 billion, by netting HK$3.07 billion from a share placement.
The debt reduction will save the group HK$167 million in interest expenses a year as the group is charged 5.6 per cent interest on yuan loans and 2.15 per cent on US dollar loans. Total debts declined to HK$10 billion following the debt reduction.
China Gas shares declined 4.57 per cent to HK$4.38 yesterday after issuing new shares at HK$4.31 apiece. The share sale price was a 6.1 per cent discount to the last traded price on Friday.
The group issued 718.55 million new shares, of which 330 million shares were sold to Liu and the rest to institutional investors.
Liu subscribed to the shares after selling the same number of shares to institutional investors through a top-up share placement. Liu's stake in the company was diluted to 8.07 per cent from 9.66 per cent previously.