China Shipping Container Lines plans to raise 1.8 billion yuan from a domestic bond sale to finance the purchase of a dozen vessels as it capitalises on the appreciation of the local currency and ease the impact of higher interest rates.
The 10-year bond, which will be listed in the interbank market, should pay an interest rate of between 4.1 per cent and 4.4 per cent, the company announced yesterday.
The planned rate was one to two percentage points lower than bank loans, which cost 5 per cent to 6 per cent, cutting interest expense by about 18 million yuan a year, company secretary Ye Yumang said.
China Shipping obtained a general mandate to sell up to 3.5 billion yuan of bonds in a shareholders' special general meeting in August last year. It still needs final approval from the National Development and Reform Commission.
'We lack yuan-denominated income, which could be helped by issuing yuan bonds to take advantage of yuan appreciation,' said Mr Ye, who added that the company was not planning another bond sale this year.
China Shipping said the bond sale proceeds would be used to fund the purchase of four container vessels with 4,250 teu (20-foot equivalent unit) capacity and eight 8,530-teu ships. It did not disclose the total price and delivery dates.
