HSBC Investment Bank Asia sees a bright future for the power industry investment market in China, which has been in the doldrums until recently. Simon Moules, head of project finance and syndications for the investment bank, said lenders were coming back to the sector because of a combination of factors, including clarification of foreign exchange issues. 'Funding has been in short supply, partly because of the affect of the austerity measures and partly because of the inability of people to navigate through obstacles thrown up by the recent reform of the financial system,' he said. Another dampening factor had been China's reluctance to take on big foreign exchange obligations because of a perceived shortage of forex reserves. According to recent figures, China now has more than US$80 billion in foreign exchange reserves. Once a big project is approved by the State Planning Commission, a letter of comfort is drafted by the State Administration of Exchange Control stating that a national forex allocation has been made for the project. 'We work to arrange the documents so that lenders have comfort, without sovereign or other guarantees, that foreign exchange will be available to repay the loans,' Mr Moules said. 'It is done with comfort letters as opposed to explicit guarantees.' HSBC Investment Bank Asia is financial adviser to a consortium bidding for Laibin B Power Station in Guanxi, an $800 million project which the Chinese Government intends to hold up as a model for all Build Own Transfer projects. The consortium includes Tomen Corp of Japan, Union Energy of Thailand and Singapore Power. Earlier this month, syndication closed for the $125.5 million loan related to the $1.2 billion Guangdong Zhuhai Power Station, arranged by HSBC and China Development Finance. The investment bank also acted as financial adviser in Shajiao C, a joint venture between Hopewell Holdings and Guangdong Provincial Electricity Utility, which involved $750 million in loans. Other power projects in which the bank has been involved include Guangdong Zhuhai Power Station - involving Cheung Kong and Hutchison Whampoa - Jiaxing Power Plant II, and Shandong China Power Stations, a four-station project. The bank was also financial adviser and arranger for Hopewell's 120-kilometre Guangzhou-Shenzhen-Zhuhai Superhighway. HSBC Investment Bank Asia also arranges financing packages for equipment suppliers selling into the China market, sometimes mixing export credits with finance from international lenders. Deals of this type have included a $125 million package which helped AT & T sell a quantity of telecommunications equipment to telecom authorities around China and a $117 million facilitation package for Nissho Iwai Corporation related to the sale of digital switching systems.