On April 23, 2018, COSCO SHIPPING completed its issuance of Phase I corporate bonds valued at RMB2.0 billion to qualified investors at the Shanghai Stock Exchange (“SSE”). The fixed-rate bonds, which were issued through book building process, are unsecured with a maturity of 3 years and a coupon rate of 4.50%, 0.25% lower than the benchmark lending rate of three-year bank loan. The deal achieved the optimal pricing result among issues of the same maturity in bond market.
With a view to expanding financing channels and reasonably matching financing maturities with bond types, COSCO SHIPPING has been actively applying to the China Securities Regulatory Commission (“CSRC”) and SSE for corporate bond issuance since 2017. On January 31, 2018, the corporation obtained the CSRC approval and successfully registered RMB20.0 Bn issuance in total. In order to have a good debut, the corporation closely followed dynamics of the capital market and monetary policies, and stepped up efforts in bond sales and recommendation. It held roadshows by telephone which were attended by more than 30 investment companies and unlocked its investment potential, yielding a promising result. During the book building process, the corporation also encouraged investors to place orders, achieving 2.10 x orderbook coverage and 1.09 x margin multiple. Driven by the momentum, the interest rate was finalized at 4.50%, the lowest among bonds of the same maturity in the market.
The capital raised will be used to pay off debt and replenish working capital of COSCO SHIPPING and its subsidiaries. The deal’s success will help COSCO SHIPPING and its subsidiaries to seize the opportunities brought by the Belt and Road Initiative to expand their business in the relevant countries and regions, and proactively respond to changes in global economic development and shipping industry.