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China Oilfield issues corporate bonds

(Xinhua)
Updated: 2007-05-24 14:42

China Oilfield Services Limited (COSL), the largest oilfield service provider in Asia, has issued corporate bonds valued at 1.5 billion yuan ahead of an expected listing on the mainland stock market.

It is the first time COSL, and its parent company, China National Offshore Oil Corporation (CNOOC), the country's largest offshore oil producer, has issued corporate bonds on the mainland market.

The 15-year bonds have an interest rate of 4.48 percent and have been classified as "AAA", the highest rating, by the Dagong Global Credit Rating. They were issued four days before the central bank announced a rise in interest rates and took four days to sell out.

Zhong Hua, executive vice president and CFO, said the bond issue was "the first step and a small step" taken by the company to enter the mainland capital market.

The company's debt to equity ratio surged from 5.2 percent in 2005 to 23.2 percent last year, but Wu Yanyan, a spokeswoman of the COSL Beijing Branch, said the percentage still had room to grow as it remained low compared with companies of a similar scale.

She attributed the rapid ratio hike to the company's fast business expansion.

The newly-raised funds will be used to erect or upgrade oil rigs, purchase ships for offshore oilfields and build a multi-functional drilling platform to help raise the oil output of the parent company and make COSL more competitive in the global arena, said a COSL statement.

COSL reportedly plans to return to the mainland stock market by issuing 820 million shares on the yuan-denominated Shanghai A-share market. But price details and a timeframe are yet to be released.

The other two Hong Kong-listed subsidiaries of CNOOC, CNOOC Limited and the Offshore Oil Engineering Co. Ltd, are also preparing for a listing on mainland stock markets, according to CNOOC deputy general manager Luo Han.

CNOOC, the third big oil corporation and biggest offshore oil and gas producer in China, chalked up 120.8 billion yuan in sales revenue and 48.1 billion yuan in profit last year. Its daily oil and gas output grew by 5.1 percent in the first quarter year-on-year to 473,280 barrels of oil equivalent.

COSL reported a 32.9-percent rise in revenue from 2005's 4,789 million yuan to last year's 6,365 million yuan. Its market value surged by 74 percent from 12.4 billion HK dollars in 2005 to last year's 21.6 billion HK dollars.