Sinopec Sells $3.5 Billion of Bonds in Push for Overseas AssetsTanya Angerer and Rachel Evans
China Petroleum & Chemical Corp. raised $3.5 billion in the second-largest sale of dollar-denominated bonds in Asia outside of Japan, as the region’s biggest refiner expands overseas.
Sinopec, as the company is known, sold $750 million of three-year bonds for a 1.25 percent coupon and $1 billion of 1.875 percent five-year debentures, according to a company filing. It also sold $1.25 billion of 10-year securities at 3.125 percent and $500 million of 30-year debt at 4.25 percent, the statement showed. The proceeds will help finance the purchase of overseas assets and fund the refiner’s international business, according to the release.
Chinese companies are looking abroad for oil and gas assets to feed the energy needs of the world’s second-biggest economy. Sinopec expects more asset deals with its state-owned parent China Petrochemical Corp. after creating a $3 billion joint venture to replace dwindling reserves with oilfields in Kazakhstan, Colombia and Russia, Vice Chairman Wang Tianpu said in Hong Kong last month.
“Chinese oil and gas companies are familiar to investors,” said Annisa Lee, a Hong Kong-based credit analyst at Nomura Holdings Inc. “Some companies benefit from stable cashflows, while others have state-owned enterprise status.”
China, the world’s largest energy consumer, is promoting a “going out” policy to encourage its companies to invest and secure energy supplies abroad, as they build businesses that can compete with global rivals.
Sinopec’s sale is the biggest dollar offering in Asia outside of Japan since Hutchison Whampoa Ltd. sold a record $5 billion of bonds in a three-part sale in November 2003, according to data compiled by Bloomberg.
China Oil & Gas Group Ltd. also sold $350 million of five-year securities to yield 5.25 percent yesterday, according to a company statement. It plans to use the proceeds from any offering to fund capital expenditures, repay existing debts and for other general corporate purposes.
China National Petroleum Corp., the nation’s largest oil company, raised $2 billion last week, paying record-low coupons for debt in three maturities, Bloomberg-compiled data show.