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