SHENZHEN Metro Co. Ltd., the major builder and operator of subways in Shenzhen, said late Monday that it had for the first time raised 10 billion yuan (US$1.59 billion) by selling medium-term notes, and the capital raised could be used to finance the third phase of Metro construction in the city.
Hua Xia Bank and Industrial and Commercial Bank of China are the lead underwriters of the five-year notes which have a fixed yield rate of 5.24 percent.
The company is considering going public to raise more capital in order to fund projects, but the timetable is not set yet, yesterday's Southern Metropolis Daily quoted company general manager Lin Maode as saying.
The company's previous projects were either financed by the city government, district governments or bank loans, the report said. To complete the first phase of Shenzhen's Metro construction, which totaled 20 kilometers in length, the city government offered 7.74 billion yuan, or 70 percent of the total investment. The remaining 30 percent were bank loans-1 billion yuan from China Development Bank, 1 billion yuan from Industrial and Commercial Bank of China and 860 million yuan from Bank of China.
For the second phase that measured 155 km in length, the city government shouldered 20 percent of the cost, while the Bao'an and Longgang district governments each offered 10 percent.
The company will need at least 100 billion yuan by 2020 to complete the third phase of the city's Metro construction, which has a total length of about 252.6 km, but the government can no longer afford such a large investment, the report said.
"The company will make full use of the capital market and enlarge financing channels, including medium-term notes, medium-term bonds, bank loans and short-term loans, in order to raise more capital," said Lin.
Source:Shenzhen Daily