China Files With U.S. SEC to Sell $1 Bln of Debt; First Sale in a Year
China Files With U.S. SEC to Sell $1 Billion of Debt (Update2)
(Rewrites first four paragraphs, adds analyst comments and
recent prices of China government bonds)
Washington, Nov. 25 (Bloomberg) -- China filed with the U.S.
Securities and Exchange Commission to sell as much as $1 billion
of debt securities, paving the way for the start of its first
sale of international bonds in more than a year.
Including a previous filing which China hasn't used yet, the
country is now cleared to sell up to $2.5 billion of debt in the
U.S. Bankers said the sale of $500 million to $1 billion of
government bonds could come this week.
China's filing became effective today, said Mark Wiltshire,
an attorney at New York-based Brown & Wood LLP, which represents
China's central government. He declined to comment on the timing
of the sale. The investment banks hired to sell the bonds --
Credit Suisse First Boston and Goldman, Sachs & Co. -- also
declined to comment on the timing.
Announced in June, China delayed its bond sale as credit
markets around the world tumbled. The sale could be coming now
because the price the country would be forced to pay has come
down in recent months, while at the same time it may be willing
to pay more than it did last year because of an urgent need for
cash, bankers said.
Since October, China has been battling one of the worst
credit-crunches in more than a decade. On Oct. 6 the central bank
closed the finance arm of Guangdong International Trust and
Investment Corp. -- the nation's second-biggest trust company --
because it couldn't repay about $2 billion of foreign debt.
Banks subsequently cut credit across the country just as
short-term loans which were being used to finance long-term
projects and investments come due. Several other trust companies
have since missed debt payments.
The sale of government bonds would give the country money it
needs to shore up its ailing banking and finance industry and
help save other international trust firms from collapsing. It
would also set a benchmark that would let other Chinese companies
follow with sales of their own.
''I will not be surprised if other leading Chinese
corporates will also come to the market following a successful
launch of the sovereign issue,'' said Eden Wong, a China credit
analyst at Barclays Capital in Hong Kong.
''The Chinese government might want to take advantage of the
improved market sentiment as spreads of the Chinese sovereign
bonds (against U.S. Treasuries with a similar maturity) have
tightened significantly in recent weeks,'' he said.
Traders said China's 10-year bonds due in 2006 are trading
at about 200 basis points more than Treasuries of similar
maturity. China could sell its new bonds at a similar price, they
said.
The filing with the U.S. regulators is called a shelf
registration, which lets a country or a company register
securities in advance and sell them when financing needs arise.
The terms of the securities are available at the time of the
sale.
China already had a $1.5 billion shelf registration from
debt securities that remain unsold.
The securities will trade on the Luxembourg Stock Exchange
and the Stock Exchange of Hong Kong, according to the documents.
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