SHANGHAI, Feb. 24 (Xinhua) -- Baosteel Group, China's third-largest steelmaker, said it will use the proceeds from a 2.9 billion yuan (US$460 million) bond sale to boost its capital and help fund asset acquisitions by its resources unit.
The proceeds will add to the funds raised in a November bond issue aimed at helping its unit, Baosteel Resources (International) Ltd, develop mining resources, Zhang Yi, the finance director of Baosteel, said in a telephone interview from Hong Kong yesterday.
The sale is the second tranche of a program to issue 6.5 billion yuan of offshore bonds after Baosteel received government approval to be the first China-based non-financial company to offer yuan bills in Hong Kong. The Shanghai-based company joins Australia's OneSteel Ltd in expanding mining operations as steel mills face falling profit margins on rising competition and high raw-material costs.
The so-called dim sum bonds consist of 500 million yuan of 3.25 percent two-year bonds, 900 million yuan of 3.675 percent three-year notes and 1.5 billion yuan of 4.15 percent five-year securities, Zhang said.
"We've seen huge demand from investors, including Taiwanese buyers, for the five-year notes and other bonds," he said. "We'll be able to cut our financing costs."
The steelmaker sold 3.6 billion yuan of notes due in two, three and five years in November.