Chongqing report: CLC raises $500 million from overseas investors

Chongqing Western Modern Logistics Industry Zone Development Construction opened the books for its five-year bond on Aug 30 in Singapore at 250 bps over US Treasuries and raised $500 million from investors.

The coupon rate is 3.25 percent.

The State-owned company, established by the Chongqing municipal government, is the developer of Chongqing Logistics City, also known as CLC, which was established in 2007 in the western part of the municipality, covering about 35 square kilometers with a total investment of 111.7 billion yuan ($17.49 billion).

It hired Citi Group and DBS as joint global coordinators. CEB International, Bank of China, Industrial and Commercial Bank of China, China Construction Bank, China Citic Bank International, Bank of Communications and Shanghai Pudong Development Bank are the joint lead managers and bookrunners.

The company hit the road for its maiden dollar outing, holding 19 investors meetings in Hong Kong, Singapore and London from Aug 23 to 29.

In addition to the relatively low fundraising cost of US dollar bonds, one of the major reasons to issue dollar bonds in the southeastern Asian country is to enhance the relationship with Singaporean investors, according to the company.

The fundraising round was the first act of financial cooperation under the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity, the third intergovernmental project between the two countries.

Chongqing, the center of operations for the program, will pilot cooperation in fields ranging from financial services, aviation, transportation and logistics to information communications technology.

In addition to the Chongqing-Xinjiang-Europe International Railway, Luo Shuquan, chairman of the Chongqing company, said that they are currently working on a new trade route. The route will start in Chongqing, run through southern China's Guangxi Zhuang autonomous region and finally reach Singapore.

The Chongqing-Guangxi-Singapore international transportation link will become the shortest cut to the sea in Southwest China, Luo said.

"It will help connect the Silk Road Economic Belt and the 21st Century Maritime Silk Road to promote the integration of Asian and European trade," he said.

The company plans to develop the Chongqing Western Modern Logistics Industry Zone into a railway- bonded logistical center after it became a free trade zone on Aug 31.

The logistics center will provide international trade and logistics services, especially in cross-border e-commerce, intermediary trade and payment settlement.

At present, it has raised 16.7 billion yuan from overseas financing, non-publicly oriented debt financing, perpetual tickets, sustainable corporate bonds and corporate bonds.

The company set up a logistics industry development fund of over 10 billion yuan with Ping An Insurance (Group) Co in April 2015.

A third-party payment platform is now under development. In May, Chongqing Railway Port Logistics Development Co, the Fujian-based superstore giant Yonghui Group, and Liangka (Beijing) Information Technology Co Ltd started to build the platform together with registered capital of 100 million yuan.

The platform's trade volume is expected to reach 300 billion yuan in the third year after launching.

"Our focus in the coming two years is to build the CLC into a pilot zone for logistical finance," said Gu Yonghong, CLC deputy general manager and president of CLC Asset Management Co.

This year, the CLC plans to set up bonding companies and a transaction settlement center, as well as build equity investment management companies in Hong Kong and Singapore, he added.

"The CLC has become a pioneer among the companies included in China's Road and Belt Initiative to use international capital to diversify its funding resources," Gu said.

tanyingzi@chinadaily.com.cn