Bank loan helps rail ministry trim debts
By Chen Li |
November 2, 2011, Wednesday
|
Print Edition
Print Edition
THE debt-laden Ministry of Railways is finally able to pay part of its huge debts to its creditors after it secured bank loans worth 200 billion yuan (US$31.6 billion).
The ministry has already paid its first batch of debts of 6 billion yuan to Shanghai-listed CSR Corp, one of the country's largest trainmakers. CSR said it expects the ministry to repay all the money by the end of December, the company told Xinhua news agency yesterday.
At the end of the second quarter the ministry owed creditors 2.09 trillion yuan, according to an earlier report released by the Shanghai Clearing House.
The report also highlighted the ministry's heavy debt burden when it said the debt-to-assets ratio, a gauge of financial health, reached 58.53 percent at the end of the second quarter due to the rapid railway expansion in the country.
The ministry's high ratio indicated it is under significant financial pressure, said Ou Guoli, a professor at Beijing Jiaotong University.
Over the past months construction of more than 10,000 kilometers of rail track has been halted as funds have dried up, leaving workers without pay, according to Chinese media reports, citing Wang Mengshu, vice chief engineer of the China Railway Tunnel Group.
The ministry has relied heavily on bond sales to finance rail construction but it is increasingly difficult to attract funds in a tight liquidity environment, and the deadly train crash in July in Wenzhou, Zhejiang Province, has also rattled investor confidence. This has severely limited the ministry's ability to borrow money or sell debt.
The ministry has already paid its first batch of debts of 6 billion yuan to Shanghai-listed CSR Corp, one of the country's largest trainmakers. CSR said it expects the ministry to repay all the money by the end of December, the company told Xinhua news agency yesterday.
At the end of the second quarter the ministry owed creditors 2.09 trillion yuan, according to an earlier report released by the Shanghai Clearing House.
The report also highlighted the ministry's heavy debt burden when it said the debt-to-assets ratio, a gauge of financial health, reached 58.53 percent at the end of the second quarter due to the rapid railway expansion in the country.
The ministry's high ratio indicated it is under significant financial pressure, said Ou Guoli, a professor at Beijing Jiaotong University.
Over the past months construction of more than 10,000 kilometers of rail track has been halted as funds have dried up, leaving workers without pay, according to Chinese media reports, citing Wang Mengshu, vice chief engineer of the China Railway Tunnel Group.
The ministry has relied heavily on bond sales to finance rail construction but it is increasingly difficult to attract funds in a tight liquidity environment, and the deadly train crash in July in Wenzhou, Zhejiang Province, has also rattled investor confidence. This has severely limited the ministry's ability to borrow money or sell debt.
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