under the strong leadership of china guodian corporation and the specific directions by the fund operations department of china guodian corporation, the issuance of 2010 china longyuan 7-year aaa corporate bonds without warranty was satisfactorily completed on february 10, 2010. a total of rmb1.6 billion was successfully raised, thus having made the history for listed companies to issue corporate bonds and for a secondary unit of a central enterprise in the electric power system to obtain the highest aaa rating.
the interest rate for the bonds that china longyuan issued in this round is 4.52%, which is lower in comparison with 4.7%, the interest rate that china resources power set for the bonds (5-year aaa corporate bonds without warranty) that it issued in the same round , and 4.62%, the interest rate of the guodian finance financial bonds (5-year aaa financial bonds with warranty provided by china guodian corporation) that it issued in the same round.
to respond to the call of china guodian corporation to make greater efforts in fund operations and bring the fund market into full to raise funds, china longyuan formally started up its issuance of bonds at the approval of china guodian corporation in march 2009. on january 30, 2010, an official approval on listed companies to issue corporate bonds was obtained from the national development and reform commission.
in this round, china longyuan has properly grasped the advantageous opportunity to issue its bonds as the central bank put forth a credit squeeze at the end of 2009 and commercial banks had relatively abundant funds. the range of interest rate for bonds issued in this round is 4.52% ~5.02%; finally, the interest rate was set down at 4.52%, the lower limit of the interest rat range, as bonds issued had be 4.24 times over subscribed by financial institutions. such an interest rate is 24% lower than the central bank’s benchmark interest rate for loans; thus, interest costs will be cut down by about rmb91.84 million during the outstanding period.
the fact that china longyuan’s corporate bonds has obtained the highest aaa rating while such bonds have been issued at the lowest interest rate has not only mainly embodied the effect of the china longyuan brand but also made the company further influential in the international fund market. this round of successful bond issuance has locked up portion of costs for funds needed for the company’s development in the future and offered guarantee for the company to prevent risks to be incurred by the interest rate in 2010. (by leng rong)