Caixin

Russian United Co. Rusal Begins Issuing 1 Billion Yuan in Bonds on Shanghai Exchange

By Zhang Yu and Dong Tongjian

(Shanghai) – Russian giant aluminum-producer United Co. Rusal has started issuing one billion yuan ($140 million) worth of onshore bonds on the Shanghai Stock Exchange, the China Securities Regulatory Commission (CSRC) said on Friday.

That step makes it the first overseas company with global operations outside of China to enter the Chinese bond market on China's stock exchanges.

Earlier this year, UC Rusal announced plans to issue 10 billion yuan worth of yuan-denominated “panda bonds”--yuan-denominated bonds issued by a non-Chinese entity in China—to fund its purchases from the mainland.

The whole issuance will be completed in several tranches. The aluminum producer now has started to sell the first tranche of one billion yuan, which has a maturity of three years and an annual coupon rate of 5.5%, said Deng Ge, spokesman of the CSRC in a press conference. The proposed offering of the panda bonds is expected to be completed on March 21.

Securities regulators streamlined the approval process to issue corporate bonds in early 2015, and since then onshore yuan-priced bonds have seen fast growth.

In 2016, foreign enterprises raised 129 billion yuan by selling panda bonds, up by 893% from a year earlier, according to China Chengxin International Credit Rating Co., Ltd. (CCXI).

Meanwhile, the stock exchanges have become the main market for issuing panda bonds. Only three panda bonds, whose principal amount were 1.5 billion yuan in total, were sold in the stock exchanges in 2015, and 11.5 billion yuan worth of such bonds were sold in China’s interbank-bond market, according data from CCXI. In 2016, foreign companies raised 83.8 billion yuan by selling the panda bonds in the bourses, nearly double the amount sold in the interbank bond market.

What makes the UC Rusal different from other panda bonds issuers is that its global operations are all undertaken outside China.

"This pilot placement will strengthen the company's profile inside China and will further facilitate Rusal's longstanding collaboration with its Asian partners," Vladislav Soloviev, CEO of Rusal, said in a news release.

CSRC spokesman Deng said that the successful issuance of the bonds further broadened the financing channel for countries along the "One Belt, One Road," an economic initiative started by China in 2013 that aims to boost trade and cooperation along the ancient Silk Road across Asia and Europe. “China will seek more openness in the bond mark on the stock exchanges, and play an active role in pushing ahead with the ‘One Belt, One Road’ initiative with better services from the capital market,” Deng said.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)


Share this article
Open WeChat and scan the QR code
Copyright ©2017 Caixin Global Limited. All Rights Reserved.