(Yicai Global) Sept. 22 -- China Railway Corp., the national railway operator, has been granted permission by the National Development and Reform Commission to issue CNY300 billion (USD45 billion) of railway construction bonds for use in construction projects, equipment purchases and debt restructuring.
This is double the amount they were allowed to issue last year.
Specifically, the state-owned company is to offer CNY170 million of bonds to raise CNY55 billion for 31 rail construction projects including the passenger transport link between Changsha and Kunming, CNY50 billion for equipment purchases and CNY65 billion for debt restructuring.
China Railway's net losses reached CNY7.3 billion in the first half of the year. Its liabilities stood at CNY4.21 trillion with a debt ratio of 64.67 percent, according to the company's interim report.
As of the end of June, over 95 percent of China Railway's total debts were long-term, implying very little short-term liquidity pressure, Mr. Zhu Zhibin, an analyst at credit ratings agency China Bond Rating Co., told Yicai Global.
Lately the cost of funds has fallen in the bond market. Issuing CNY100 billion of railway bonds will help lower financing costs and increase the proportion of direct financing for the firm.