Economy

Markets

Industries

Insights

Reports

Events

Sinopec launches convertible bond

(Shenzhen Daily)
Updated: 2007-04-18 13:42

Top Asian oil refiner Sinopec Corp is selling a US$1.5 billion convertible bond, the largest-ever from a Chinese issuer, according to a term sheet obtained by Reuters yesterday.

Sinopec, whose shares jumped nearly 22 percent over the past month, will use the deal's proceeds to repay foreign currency loans incurred when it privatized two listed units, Beijing Yanhua Petrochemical Co. Ltd. and Sinopec Zhenhai Refining and Chemical Co. Ltd, a source familiar with the deal said.

On Monday, the company beat forecasts when it reported a more than two-fold increase in quarterly earnings as falling oil prices helped a turnaround at its refining arm. The company also forecast first-half earnings growth of 50 percent.

The convertible bond sale tops fellow oil company CNOOC Ltd's US$1 billion issue in late 2004 as the largest-ever convertible bond from a Chinese company, according to Dealogic.

The seven-year, zero-coupon issue has a yield-to-maturity of 2.5 to 3 percent and a conversion premium of 45 to 50 percent to the reference price of HK$7.17 (US$0.919) per share, which was the stock's Monday closing price in Hong Kong.

The convertible bond was the second in as many days launched by a Chinese issuer. On Monday, top mainland property developer China Overseas Land & Investment Ltd sold a US$500 million convertible bond.

Sinopec shares hit an all-time high of HK$7.77 each in January.

After Sinopec's earnings report Monday, Citigroup cut its rating on the company to sell from buy, saying that the stock was not cheap and that earnings momentum for the firm was turning negative.