MARKETS | Tony Chua, China

Central Huijin to issue RMB187.5 bonds

Earnings of sovereign wealth fund’s first bond sale to be used for Export-Import Bank of China.

Central Huijin Investment Co., the state company that controls China’s biggest banks, plans to sell 187.5 billion yuan ($28 billion) of bonds to bolster its stakes in the lenders.

The domestic arm of the nation’s sovereign wealth fund, China Investment Corp., will sell 40 billion yuan in the first portion Aug. 24 on the interbank market, it said in a statement on Thursday on the website of Chinabond, the official clearinghouse.

The money will be used for Export-Import Bank of China, which provides trade financing on behalf of the government, and China Export and Credit Insurance Corp., known as Sinosure. Huijin will also participate in the rights offerings of China’s three largest banks, Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd. They have announced plans to raise as much as 180 billion yuan through rights offers.

Selling bonds is a first for Huijin, which was set up in 2003 and used the nation’s currency reserves to prop up ICBC and Bank of China.

The first tranche will consist of 20 billion yuan in seven- year fixed-rate notes and 20 billion yuan in 20-year fixed-rate bonds, Huijin said. It has the option to increase the total amount by 14 billion yuan, including up to 6 billion yuan in the seven-year notes, and 8 billion yuan in the longer-dated debt.

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