BEIJING: Chinese companies often face financing difficulties when they expand internationally due to the lack of information about their credit history overseas. However, this is providing several business opportunities for Bank of China Ltd, the most internationalized bank in the country, an official said.
Zhu Yun, general manager of the corporate finance department of BOC’s branch in Xinjiang Uygur autonomous region, said: “At present, most Xinjiang-based companies that are going global can not seek funds at lower costs with offshore debt issuance, nor do they receive wide recognition from international investors in terms of enterprise credit. This has restricted the competitiveness of Chinese companies overseas and affected the scale and speed of their international expansion.”
Bank of China, the nation’s fourth-largest lender by assets, is turning this challenge into an opportunity for business growth by helping domestic companies build credit and receive low-cost financing worldwide.
Dou Bo, president of BOC’s Xinjiang branch, said: “There is a growing need for Xinjiang-based companies to expand globally. Supporting the Belt and Road Initiative, which was proposed by China to revive the ancient trade routes connecting Asia, Africa and Europe, as well as the internationalization of the renminbi, is a route Bank of China must take to achieve business transformation and cross-border development.”
On July 17, the bank helped Xinjiang Goldwind Science & Technology Co, China’s biggest wind-turbine manufacturer, issue $300 million three-year bonds overseas at a coupon rate of 2.5 percent. The offer was five-times oversubscribed, receiving orders of almost $1.5 billion from 66 accounts globally.
It was the first offshore green bond offering by a Chinese company.
During the process, Bank of China helped Goldwind win recognition from international investors in terms of the company’s ability to obtain financing from global financial markets, thus increasing its international reputation and market influence, Zhu said.
In recent years, a growing number of Chinese companies expanded their business operations into other countries by taking on engineering contracts, which led to the export of their products and equipment.
As China is pushing forward the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives, these companies are required by some underdeveloped and developing countries along the Belt and Road to provide financing solutions－usually with the help of banks－to win engineering contracts.
TBEA Co Ltd, a Chinese manufacturer of power transformers and other electrical equipment and a developer of transmission projects, started 12 projects worth nearly $3 billion in nine countries. These projects are mainly located in less developed countries, so TBEA, the contractor, needs a strong support from banks to provide financing for the projects.
Zhang Jian, general accountant of TBEA, said the corporation is pushing forward cooperation with Bank of China in business exploration and is seeking export buyer’s credit. The bank has made loan commitments of more than $1 billion to the corporation’s ongoing projects.
