China state grid to sell $2.9bn bonds to expand

State Grid Corp. of China, the nation’s biggest electricity distributor, plans to sell 20 billion yuan ($2.9bn) of bonds on September 9 to finance expansion including a high-voltage direct-current project.

The Beijing-based company will offer 10bn yuan of seven-year bonds and 10bn yuan of 10-year notes on the interbank market, it said in a statement posted on the Web site of China’s biggest debt clearing house. Both tranches may be increased by 5bn yuan if demand is sufficient, it said.

The seven-year bonds will be priced to pay between 2.02 percentage points and 2.62 percentage points more than the five- day average of the one-year Shibor rate, while the 10-year notes will be priced at between 2.32 percentage points and 2.87 percentage points more than the benchmark, the statement said.

State Grid will use 13bn yuan of the money raised to build networks including a high-voltage project linking southwestern Sichuan province to eastern Shanghai, it said. Another 3bn yuan will be used to repay bank loans, while the remaining 4bn yuan will be put aside as operating cash, according to the company.

Citic Securities Co., Southwest Securities Co., China Everbright Securities Co., China Merchants Securities Co., Guotai Junan Securities Co. and Bank of China International Inc. are managing the sales.