Ministry of Railways to issue 1.5 bln yuan bond

Beijing (CNS) – The Chinese Ministry of Railways submitted a public bid to issue a type of medium-term note with a five-year period valued at 1.5 billion yuan, it announced on China Bond Web. This is the first attempt in 2012 the ministry has made to finance itself on the inter-bank bond market.

According to China Lianhe Credit Rating Co., Ltd, a nation-wide professional evaluation institute, the credit ratings for both the ministry and the note itself are AAA, the top level in the Chinese credit ranking system.

The ministry's financial troubles have become obvious since the tragic train accident on July 23 2011. As of September 31 2011, the debt ratio of the ministry hit 59.6 percent, according to research conducted by Industrial Securities.

The report estimated the railway ministry will encounter a capital shortage of over 800 billion yuan in 2012.

Minister Sheng Guangzu said at the beginning of this year that they would seek support from related departments to expand their bond offering and attract civil capital as well as investments by local governments.