(December 17, 2005) The Three Gorges Project Corp. plans to issue bonds worth five billion yuan (US$600 million) to domestic investors. 

Shanghai: China’s Three Gorges Project Corp. plans to issue five billion yuan ($1=CNY8.28) of yuan-denominated bonds to domestic investors, a company spokeswoman said Friday. “We are waiting for the approval from SDPC (State Development Planning Commission), and this bond is expected to be issued in late August or early September,” she said. She said the maturity, coupon rate and the lead underwriter haven’t been finalized. She added that the bond proceeds will be used to help finance the third phase of the massive Three Gorges Dam project. The company has issued several bond tranches in the past. Its latest offering was made in November. In November, the company issued CNY5 billion of bonds – CNY3 billion in 15-year fixed-rate bonds and CNY2 billion in 10-year floating-rate instruments. The fixed-rate bond carries an annual interest rate of 5.21%, while the floating-rate bond carries an annual interest rate of 175 basis points above the one-year bank deposit rate, which currently stands at 1.98%. The fixed-rate bond is currently traded at 114.03 on the secondary market, giving an effective yield of 4.24%. The illiquid floating-rate bond is being traded at 104.19. In June, Three Gorges Dam project officials said the cost estimate of the project has been reduced to CNY180 billion from the original CNY203.8 billion. The company has already raised CNY11 billion through bond issues and CNY30 billion in soft loans from the China Development Bank.

Dow Jones,  December 17, 2005