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CNBM Successfully Issues Corporate Bonds and Makes New Breakthrough in Financing

2016-09-26

On 23 September, China National Building Materials Company Limited successfully issued the first tranche of corporate bonds with an amount of 5 billion yuan. With confidence on the excellent reputation and future development strategy of CNBM, investors showed great enthusiasm for subscribing corporate bonds. The issue was 3 times subscribed. After several rounds of bidding, five-year bonds with an amount of 3 billion yuan were issued, with the coupon interest rate of 3.09%; seven-year bonds with an amount of 2 billion yuan were issued, with the coupon interest rate of 3.45%, hitting a record low of the interest rate of bonds of CNBM of the same maturity. The issue of corporate bonds further expanded the financing channel of CNBM, and will have a far-reaching influence on lowering down the financing cost of the company and optimizing the debt structure of the company.

After two months' intense preparation, the corporate bonds project of CNBM was approved by China Securities Regulatory Commission Securities License (2016) No. 2084 Document on 9 September 2016. The company is permitted to issue corporate bonds with an aggregate amount of not more than 20 billion yuan in the next 24 months. After the approval, CNBM and lead underwriter China Securities Co.,Ltd., China International Capital Corporation Limited, Tebon Securities Co., Ltd. and Xiangcai Securities Co., Ltd. made actual judgement, strictly grasped the time window of the issue, and formulated a proper issue scheme according to capital demand of the company. The first tranche of corporate bonds consist of two types. The first type has a term of five years (3+2 years) with the issuer’s option to adjust the coupon rate after the end of the third year and the investors’ option to sell back to the Issuer. The basic issue size for the first type bonds is 1 billion yuan. The second type has a term of seven years (5+2 years) with the issuer’s option to adjust the coupon rate after the end of the fifth year and the investors’ option to sell back to the issuer. The basic issue size for the second type bonds is 1 billion yuan. Meanwhile, the company can issue over-allotment bonds with an amount of not more than 3 billion yuan, with investor's option to sell back to the issuer.

The issue of corporate bonds is an important measure of the company to carry out capital operation and expand financing channels. Since its incorporation, through capital operation, such as IPO, follow-on offering, introduction of strategic investors, deepening cooperation with financial institutes such as banks, pushing ahead the issue of various kinds of bonds, and finance leasing, CNBM promoted the implementation of the united reorganization strategy. As a result, the company has realized leap-forward development in a short time, and has become a leading enterprise in the industry that ranks No.1 in the world in terms of production capacity of cement, ready-mixed concrete, plaster tablet and glass fibre and No.1 in China in terms of production capacity of wind turbine blades and carbon fibre. For 11 years since its incorporation, the compound growth rates of the total assets, revenue and net profit of the company all are above 20%, offering admirable return to shareholders.

In recent years, faced with new changes brought by national economic transformation and industrial structural adjustment, according to requirements of the capital market and based on development need of the enterprise, CNBM timely adjusted its development strategy, and promoted the enterprise to become not only bigger and stronger but also better. Under the backdrop of fluctuation in the capital market and tighter national monetary policy and big debt pressure, CNBM pushed ahead in-depth integration and optimization, prudently carried out capital operation, constantly optimized capital structure and debt structure, reduced financial risk and financial expenses, and improved the company's development quality. Investors' enthusiasm in subscription and great support also powerfully demonstrated that the company's reputation and strategy, and measures taken and achievements made in capital operation are fully recognized in the market.

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