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China's CCB signs $4.3 billion of debt/equity swaps with coal, steel firms

A sign of China Construction Bank is seen at a branch in Beijing, China, April 21, 2016. REUTERS/Kim Kyung-Hoon/File

SHANGHAI (Reuters) - China Construction Bank Corp (CCB) <601939.SS> <0939.HK> has signed around 30 billion yuan ($4.31 billion) worth of debt-for-equity swaps with eastern Anhui province's state-owned coal and steel firms, the official Xinhua news agency said late on Wednesday. Since China's policymakers re-launched the debt-for-equity scheme in October to ease the borrowing overhang of its struggling firms, the country's banks have rushed to sign deals with state-owned enterprises to ease their burden. The country's second biggest lender CCB has signed a 30 billion yuan debt-for-equity framework agreement with Huainan Mining Industry (Group) Co, Huaibei Mining Group and Magang (Group) Holding, the parent company of Maanshan Iron & Steel Co <600808.SS><0323.HK>, to reduce leverage and increase profits, said Xinhua. CCB also agreed to provide Huainan Mining, Huaibei Mining and Wanbei Coal-Electricity Group with more than 30 billion yuan worth of credit within the next 5 years, together with comprehensive financial services that include investment banking and settlement services among other things, said Xinhua. CCB, Huainan Mining, Huaibei Mining, Wanbei Coal-Electricity Group and Magang (Group) Holding were not immediately available for comment when contacted by Reuters. The deal follows a CCB $739 million debt-for-equity swap with Xiamen CCRE in November. Heavy industries such as coal and steel are suffering from over-capacity as China has switched its economic growth strategy to depend more on higher-end technology and consumption. On Monday, the country's largest lender Industrial and Commercial Bank of China (ICBC) signed three debt-for-equity swaps with Shanxi province's highly indebted state-owned coal and steel firms. (Reporting by Engen Tham in Shanghai and Shu Zhang in Beijing; Editing by Simon Cameron-Moore)