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Cnooc Parent Said to Weigh Up to $3 Billion Dollar-Bond Sale

A security guard stands outside the China National Offshore Oil Corp. (CNOOC) Ltd., headquarters in Beijing. Photographer: Adam Dean/Bloomberg
A security guard stands outside the China National Offshore Oil Corp. (CNOOC) Ltd., headquarters in Beijing. Photographer: Adam Dean/Bloomberg

Aug. 6 (Bloomberg) -- China National Offshore Oil Corp., the parent of the nation’s biggest offshore energy explorer, is considering raising as much as $3 billion in a sale of dollar-denominated bonds, two people with knowledge of the matter said.

The state-backed company hasn’t made a final decision on the size of the offering, said the people, who asked not to be identified as the deliberations are private. Cnooc Ltd., its listed unit, in May raised $4 billion in the biggest dollar-bond sale from Asia outside of Japan in more than nine years.

Chinese dollar-bond sales are showing signs of a revival after yields fell from a peak in June. Firms from China Petroleum and Chemical Corp. to China Huaneng Group Corp. sold a record $22.8 billion of dollar-denominated notes in the second quarter, before interest-rate jitters froze the market, data compiled by Bloomberg show.

Liu Xiaobiao, China National Offshore’s Beijing-based spokesman, didn’t respond to phone calls, e-mails and a text message seeking comment.

Yields on Chinese dollar bonds declined to 6.26 percent, as of yesterday, from as high as 6.59 percent in June, according to JPMorgan Chase & Co. indexes.

Bond Sales

China this month announced rising manufacturing and services indexes and gains in gauges of business expectations. Such reports could bolster confidence that Premier Li Keqiang’s policies are helping prevent a deeper slowdown in the world’s second-largest economy, allowing him to pursue reforms that will secure more sustainable longer-term expansion. China is still on track to meet its 2013 growth target of 7.5 percent, according to a July survey of analysts for Bloomberg News.

China National Offshore’s plans come as China Longyuan Power Group Corp., a state-backed wind farm operator, sold debt in the U.S. currency yesterday. The company, which is based in Beijing, raised $300 million in the third offering by a Chinese company since sales froze in June, data compiled by Bloomberg show.

Cnooc and its parent spent about $26 billion on overseas acquisitions in the five years through end of 2012, according to data compiled by Bloomberg, making it the second most acquisitive Chinese energy company during the period. Cnooc bought Nexen Inc. for $15.1 billion last year in the biggest outbound takeover by a Chinese company. The proceeds from its May sale were slated to partly refinance that buyout, stock exchange filings show.

Cnooc’s 3 percent bonds due May 2023 were quoted at 89.9 cents on the dollar as of 10:42 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc. The securities priced at 98.477 cents, data compiled by Bloomberg show.

To contact the reporters on this story: Zijing Wu in Hong Kong at zwu17@bloomberg.net; Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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