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Corporate bond sale nets ABC US$7.3b

THE Agricultural Bank of China, the country's main rural lender, says it has raised 50 billion yuan (US$7.3 billion) in a corporate bond sale, the country's biggest so far, as part of its preparation for a share listing.

Chinese companies, governments and financial institutions, unable to count on share offerings amid the financial crisis, increasingly are relying on bond issues to raise capital.

Beijing-based ABC said in a statement that it sold 20 billion yuan of 10-year callable bonds at a 3.3 percent coupon rate for the first five years on the interbank market and 25 billion yuan of 15-year bonds at 4 percent for the first 10 years.

The bank sold another 5 billion yuan of variable rate bonds at 0.6 percentage point above the benchmark one-year deposit rate.

The bank was the last of China's four big state-owned lenders to be restructured in preparation for a share listing. The bank, which got a US$19 billion bailout last fall, has not given a timetable for its initial public offering.

The bank recently reported that its core capital adequacy ratio by the end of 2008 was 8.04 percent, a relatively low figure compared with the double-digit ratios of other major banks. Proceeds from the bond sale would help the bank boost its reserves to prepare for a share listing.

China's Railway Ministry raised 45 billion yuan in 2007 in what had been the largest bond sale so far. China Construction Bank, another of the so-called "Big Four" state lenders, raised 40 billion yuan in February.

Oil and gas firm PetroChina recently said it intends to raise US$22 billion in a bond sale to help fund its output and investment this year.

Other major Chinese banks have announced plans to sell up to 300 billion yuan of corporate bonds by 2012, said the Securities Daily.


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