(Yicai Global) Aug. 7 -- China's southwestern province of Yunnan will issue the country's first bond for the purpose to build undergraduate schools.
Yunnan Provincial Department of Finance will start selling CNY1 billion (USD1.46 million) worth of debt securities on Aug. 10, local tabloid Spring City Evening News reported. Some CNY840 million of the funds will be used to construct a new Anning campus of the Yunnan University of Finance and Economics and the rest to build the Yunnan College of Finance and Economics.
The bonds will involve a five-year maturity date starting from this year. A number of rating agencies have granted the highest rating of AAA for the fixed-income security. Both schools' income from tuition and accommodation fees will constitute stable cash flows to ensure the repayment of principal and interest. The university's estimated income during the bond maturity period is CNY3.4 billion.
The special college debt security represents a new local government bond variety issued by the Ministry of Finance, so as to provide appropriate fundraising for college construction, said Zheng Chunrong, a professor at the Shanghai University of Finance and Economics.
Editor: Emmi Laine