Central Huijin to sell bonds

08:54, June 25, 2010      

Email | Print | Subscribe | Comments | Forum 

Central Huijin Investment Co, the domestic investment arm of China's sovereign wealth fund, will start to sell bonds worth 80 billion yuan ($11.73 billion) as early as next month and will inject the proceeds into two policy-oriented financial institutions, a source close to the matter said on Thursday.

Five brokerages including Citic Securities, China's largest by market value, have been selected to underwrite the bond sale, the source said.

Central Huijin, as sources earlier told China Daily, will use the proceeds for capital injections into Export-Import Bank of China (China Eximbank) and China Export & Credit Insurance Corp (Sinosure) to help strengthen their capital base.

The move is widely seen as an effort by policymakers to promote the restructuring of China Eximbank and Sinosure in order to bolster support for Chinese exporters and importers amid the uncertain global economic outlook.

China Eximbank, founded in 1994, is a policy-oriented bank, which provides financing to Chinese exporters and importers. Sinosure was founded in 2001 to provide export credit insurance to Chinese exporters.

The two financial institutions have been facing mounting risks from non-performing loans and are in dire need of cash to replenish their capital base. Market watchers said the cash injection from Central Huijin will help consolidate their policy-oriented business and clear bad loans from their balance sheets.

China Eximbank had 792.1 billion yuan in assets and 781.9 billion yuan of debt at the end of 2009, according to its annual report. The lender reported a net profit of 2.5 billion yuan in 2009, a 14 percent rise year-on-year.

Sinosure sold 781.2 billion yuan of export credit insurance in 2009, an 85.8 percent increase year-on-year, according to the company. The State-owned insurance company suffered losses in 2008 due to a surge in claims, which significantly weakened its capital.

The financial bonds issued by Central Huijin would be priced at a rate lower than those issued by commercial banks, but higher than policy financial bonds, according to analysts.

Market watchers, however, are not exactly upbeat about the earning prospects of Central Huijin's bond issue, as domestic banks will face mounting bad loan risks in the coming years after the lending spree of 2009.

Central Huijin, parent of Industrial and Commercial Bank of China, Bank of China and China Construction Bank, recently said that it would participate in the fundraising of the country's top three banks to help replenish their capital base.

Source: China Daily

(Editor:黄硕)

  • Do you have anything to say?

双语词典
dictionary

  
Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • A man visits "Thy Word Is Truth, the Bible Ministry Exhibition of the Protestant Church in China", during its opening at Mount Vernon Place United Methodist Church in Washington DC, capital of the United States, Sept. 28, 2011. Through the Bible's various Chinese versions, ancient or modern, as well as pictures, paintings, calligraphy, art works and historical documents, the exhibition was expected to give an overall understanding of how Bible was brought into China, how it was translated, published, distributed and loved. (Xinhua/Zhang Jun)
  • A visitor passes by in the exhibition of Istanbul design week on Sept. 28, 2011 in Istanbul, Turkey. Istanbul design week will be hosting designers and design exhibitions from around the world in Istanbul from Sept 28 to Oct 2 with the participation of 25 countries. (Xinhua/Ma yan)
  • Red flag flies at the Jiuquan Satellite Launch Center in northwest China's Gansu Province, Sept. 28, 2011. A spokesperson with China's manned space program said Wednesday that fuel has been injected into the Long March-2FT1 carrier rocket in preparation for launching the Tiangong-1 space module Thursday evening as planned. (Xinhua/Wang Jianmin)
  • A militant loyal to the Libyan National Transitional Council (NTC) waves in a tank near Bani Walid, one of the pro-Muammar Gaddafi strongholds, on Sept. 28, 2011. (Xinhua/Hamza Turkia)
  • Jewish worshippers pray at the Western Wall, Judaism's holiest prayer site, in Jerusalem's Old City on Sept. 28, 2011, ahead of Rosh Hashanah, the two-day Jewish new year which will begin at sunset on Sept. 28 and conclude at nightfall on Sept. 30. (Xinhua/Muammar Awad)
  • High school student Johanna Choapa is helped by her father after announcing the end of hunger strike in Santiago, capital of Chile, on Sept. 28, 2011. The end of the strike took place to make way for a dialogue with the government, seeking to resolve the four-month crisis in the education sector. (Xinhua/Jorge Villegas)
Hot Forum Discussion