Baosteel Group, China's second-largest steel producer, has mandated Bank of China as lead manager and book-runner for a proposed yuan-denominated bond offering.
The bonds were expected to be launched, subject to market conditions, following a series of investor conference calls and meetings, a person familiar with the terms of the deal said.
Baosteel, the Shanghai-based parent of listed Baoshan Iron & Steel, yesterday held an investor telephone conference and online presentation with investors.
Baosteel sold 3.6 billion yuan (HK$4.42 billion) of yuan-denominated bonds in Hong Kong last November, the largest corporate issuance of a yuan bond in Hong Kong.
Last October, it received approval from the central government to issue up to 6.5 billion yuan of yuan bonds in Hong Kong. It was the first mainland non-financial firm to be allowed to issue yuan bonds in Hong Kong.
According to a research note issued yesterday by rating agency Moody's Investors Service, the terms of the proposed bond were similar to the one issued in November, and the proceeds would fund expansion of its resources unit Baosteel Resources (International) which was set up a year ago.
The maturity of the bonds issued in November were two to five years, with interest rates ranging from 3.13 per cent to 4.38 per cent.
Moody's gave Baosteel an A3 senior unsecured debt rating to the proposed bond, while Standard & Poor's assigned it an A rating and Fitch Ratings gave it a A- rating. S&P said it may lower its rating if Baosteel's debt-to-earnings before interest, taxes, depreciation and amortisation (EBITDA) ratio exceeds 3.0 times EBITDA.
According to presentation material seen by the Post, the ratio stood at 2.3 times EBITDA at the end of 2010, down from 3.0 times a year earlier.Topics: Private Equity Bonds Baosteel Business Baosteel Group