SHANGHAI: China's Ministry of Railways is poised to auction 20 billion yuan ($3.14 billion) in 10-year enterprise bonds, possibly as early as next week, debt capital markets sources told Reuters on Monday.
The ministry has sold a total of 30 billion yuan in five-year medium-term notes this year, but the upcoming auction will mark its first issuance of enterprise bonds this year.
Total fixed-asset investment in railways totaled 89.6 billion yuan in January through April this year, down 48.3 percent year-on-year.
A high-speed train crash that killed 40 people in July 2011 caused banks and investors to shun the industry, with construction on about 10,000 km (6,000 miles) of rail suspended and contractors, suppliers and migrant workers left unpaid, according to media reports.
To make railway bonds more attractive, the government has explicitly said it will back the ministry's bonds.
Last month, China's top economic planning agency said it may double total approvals for enterprise bond issuance in 2012.
The official from the National Development Reform Commission (NDRC) also said that it would exempt the ministry from a ban on new debt sales by issuers whose total debt exceeds 40 percent of net assets, according to notes of the remarks seen by Reuters.
The ministry's last issue of enterprise bonds was in November last year, when it issued 15 billion yuan each of 7-year and 10-year bonds. That was part of a total of 100 billion yuan in enterprise bonds that it issued last year.
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