China National Petroleum Corp, the mainland's largest state-owned enterprise, plans to issue notes to raise funds to increase its stake in its publicly listed arm, PetroChina. CNPC has said it will issue 20 billion yuan (HK$22.62 billion) of three-year notes on the interbank market on November 3. The deal is to be mainly underwritten by Industrial and Commercial Bank of China. CNPC might be the first state-owned enterprise to raise its stake in its listed unit using this method and more companies were expected to follow suit, said Guotai Junan Securities bond analyst Lin Zhaohui. The company said it would also use the proceeds from the sale to supplement its working capital. About 70 per cent of the remainder would be used to fund strategic projects such as overseas construction and exploration. Last week, CNPC said it had signed an accord with Uzbekistan's state oil firm to jointly develop an oilfield in the central Asian country. In addition, China and Iraq reportedly signed a US$3 billion oil agreement to allow CNPC to develop the Ahdab field for 20 years. Earlier this month, the People's Bank of China resumed an approval process to allow companies to issue three to five-year medium-term notes. The central bank said it would allow listed companies to use proceeds from medium-term issuances to finance share buy-backs, a move aimed at shoring up the sagging stock market. The mainland's benchmark stock index yesterday slid 6.32 per cent to a 25-month low and is 71.71 per cent off its peak a year ago. It has lost 67.25 per cent this year. PetroChina said late last month that CNPC had raised its stake in the company to 86.32 per cent from 86.29 per cent by buying shares on the Shanghai stock market. PetroChina said at the time that CNPC aimed to increase its stake in the Hong Kong and Shanghai-listed company by 2 per cent in 12 months. PetroChina's mainland stock dropped 6.4 per cent to 9.95 yuan yesterday and its Hong Kong shares tumbled 15 per cent to HK$4.25. Following the resumption of the medium-term notes, several companies have issued bonds, including China Telecom Corp, which sold 10 billion yuan of five-year notes.