PEREGRINE will arrange a bond issue for Hopewell Holdings' Consolidated Electric Power Asia (CEPA) following Hopewell's decision to take a US$744 million and HK$1.2 billion dual-currency loan rather than issue bonds. But Peregrine denied that Hopewell had rejected a bond issue - rumoured to be up to US$1 billion - because it could not secure an investment grade rating from Standard & Poor's (S & P). Peregrine director Nick Bryan-Brown said Hopewell had secured a BBB-minus implied rating from S & P, which was investment grade. 'Hopewell has decided to go down the bank lending route. But CEPA intends to issue corporate and project bonds on which it is being advised by Peregrine,' said Mr Bryan-Brown. Hopewell said it would use part of the proceeds of the dual-currency facility to buy shares in CEPA, which it spun off last year, and the remainder for working capital purposes. It had drawn about US$256 million of the US dollar tranche of the facility to pay for 800 million partly-paid CEPA shares at HK$2.50 a share. Another US$256 million would be drawn to pay for the final slice of CEPA shares due on December 6 next year. Hopewell only partly paid for its slice of CEPA shares when the power company was spun off last year. After paying on Tuesday for the first 800 million partly paid shares, Hopewell said its stake in CEPA rose to 54.6 per cent from 44.5 per cent. After making the second payment at the end of next year, it said it would hold 61.6 per cent of CEPA. In return for the dual-currency secured loan, Hopewell said it was granting the banks options at 50 cents each to subscribe to HK$1.5 billion of new ordinary shares in Hopewell. The initial subscription price was HK$8.20 a share, a premium of about 28 per cent over Tuesday's closing price of $6.40, it said. The options were exercisable between January 1, 1995, and December 5, 1999. If all the options were exercised, the banks would end up with a maximum of 182.93 million new shares or 4.2 per cent of Hopewell's issued share capital. The options would not be listed on the stock exchange and their issue to the banks was conditional on stock exchange approval, Hopewell said. In order to take advantage of the growing opportunities of power projects in Asia, CEPA said in an announcement last night that the company intended to issue bonds in capital markets for which it would seek a credit rating. 'CEPA also intends to consider the use of project bonds as part of the financing of its power projects in Asia,' it said. The project bonds will be issued for CEPA's projects in the Philippines and Indonesia. But the company noted that the terms of the proposed bond issues had yet to finalised and it would make a further announcement when a formal decision was made whether it would proceed with the issues.