CRC issues bonds to build railways

The China Railway Corporation (CRC). a spinoff from the now defunct Ministry of Railways (MOR). issued Tuesday a second batch of bonds worth a total of 20 billion yuan ($3.26 billion) in order to fund the laying down of more railways, as the country speeds up infrastructure construction to bolster the economy.

The issuance came after the Xinhua News Agency reported last week that the CRC will increase the annual investment in fixed-assets by 10 billion yuan to 660 billion yuan, of which 530 billion yuan will be used for infrastructure construction.

The company issued 10 billion yuan in 10-year bonds through auction and another 10 billion yuan in 20-year bonds on Tuesday, according to a notice on the official website of the China Central ­Depository & Clearing Co, the country's bond clearing body.

The funds raised through the auction will be used to finance the construction of 46 railways including expansion and renovation of the Harbin-Suifenhe ­Railway and the special passenger line for the newly built Shenyang-Dandong Railway.

The company already sold another 20 billion yuan in bonds to finance railway construction on July 23.

"The concentrated issuance of bonds by CRC recently is a response to the government's recent calls to speed up ­infrastructure construction to help stabilize the economy," Zhang Zhuting, a professor with the Transport Management Institute under the Ministry of Transport, told the Global Times.

"Raising corporate bonds to finance railway construction is currently the most efficient and feasible financing channel. As reforms deepen, private investors can be attracted to the sector through the build-transfer model to ensure a solid return on investment," Zhang said.

In early July, the National Development and Reform Commission (NDRC). the country's top economic planner, approved the CRC issuing a total of 150 billion yuan bonds to finance 73 railway construction projects in 2013, the Shanghai-based National Business Daily reported in July.

CRC plans to add 5,500 kilometers of railway lines this year to bring the total length of railways in service to more than 100,000 kilometers by the end of the year.

"To achieve the target, CRC needs to diversify its financing channel to be able to secure construction capital of more than 500 billion yuan in the year," Sun Zhang, a professor at the Urban Rail Transit and Railway Engineering Department of Shanghai Tongji University, told the Global Times Tuesday.

"Bond issuance can be used to finance railway construction in the central and western regions. But a more market-based practice can be used to finance railways in the eastern region, which ­includes attracting private capital to build coal transporting lines and high-speed railways promising more investment returns," Sun said.

The CRC was created in March as part of a cabinet restructuring plan to split the MOR into two entities. In a major reform following its incorporation, the company announced in June it would launch a door-to-door express freight service to allow it to better ­compete in the logistics market.