Bond sale has touch of steel

SHANXI Taigang Stainless Steel Co, China's biggest maker of the corrosion-resistant metal, plans to raise as much as two billion yuan (US$264 million) selling one-year bonds.

The aim is to replenish capital and reduce financial costs, Bloomberg News reported.

The Taiyuan, Shanxi Province-based company will sell bonds on Wednesday to institutional investors via the inter-bank market, the steel maker said in a statement yesterday posted on the Chinabond.com.cn Website.

China started allowing companies to sell short-term bills, or debt with maturity of one year or less, in 2005. The move was part of efforts to curb companies' reliance on bank lending and to develop the bond market.

Selling short-term securities can help companies raise extra funds and cut borrowing costs.

Shares of Shanxi Taigang declined as much as 3.3 percent to 19.35 yuan in Shanghai.

The shares have surged almost fivefold in the past year, making them the best-performer of the 23 steel companies tracked by the Bloomberg Asia Pacific Iron/Steel Index.