SHANGHAI-BASED China Textile Machinery is planning the first convertible bond issue by a mainland-incorporated company. SBCI Finance Asia is arranging the issue, which is mainly aimed at Swiss institutional fixed interest investors. It is understood the issue will be the first to be convertible into B shares. Lawrence Ang, of SBCI, said the details of the issue had yet to be finalised. ''The enthusiasm for the issue is great, though.'' The issue is expected to be a 35 million Swiss franc (about HK$181 million) five-year bond with a yield of below three per cent. The issue premium is expected to be around 20 per cent. The issue will conform to standards recognised by Swiss institutions and used already in the issue of Malaysian and Thai corporate convertible bonds. The issue will use a mainland company rather than, as in other such issues, a British Virgin Islands vehicle. ''Swiss institutions are very interested in obtaining some China exposure and participation,'' said Mr Ang. ''It is benefiting from the fact that it is new and it is also quite small.'' At present SBCI is on a roadshow in Switzerland promoting the issue. Details and the launching of the bond are expected sometime next week. China Textile Machinery is listed on the Shanghai stock exchange and issued B shares last year. Mr Ang said: ''The demand for this kind of issue is so great that I believe by early 1994 you will probably see some more issues of a similar nature.'' It is understood the details of the issue are quite complex as they take into account the lack of authorised share capital under mainland corporate capital structures. A special mechanism may be required by which shares can be made available at the time of conversion.