China CNPC to issue 20 bln yuan bills next Monday

SHANGHAI, Oct 27 (Reuters) - China National Petroleum Corp (CNPC), parent of PetroChina (601857.SS)(0857.HK)(PTR.N), said on Monday it would issue 20 billion yuan ($2.9 billion) of three-year bills in the interbank market on Monday next week.

The issue, to be used for the purchase of shares in PetroChina, as well as working capital requirements and overseas projects, will be the first batch of CNPC's planned issuance of 80 billion yuan of medium-term corporate bills.

The registration of the plan was completed on Friday with the National Association of Financial Market Institutional Investors.

Authorities are encouraging the issuance of medium-term corporate bills and all forms of corporate debt, to bolster corporate financing and prop up the economy as growth slows.

Industrial and Commercial Bank of China is the lead underwriter while Bank of Communications is the co-lead underwriter. The issue and issuer are rated AAA by China Lianhe Ratings.

The second batch of bills for 20 billion yuan will be issued in the fourth quarter of 2008, and the third batch for the remaining 40 billion yuan is to be issued in the second half of 2009.

In June, PetroChina announced a plan to issue up to 60 billion yuan in corporate bonds, with maturities of up to 15 years, for purposes including supplementing working capital, as high oil prices pressured its finances.

The huge bond issue was delayed, however, as it was ordered to go through complex regulatory procedures, while the medium-term bill issue required only a simple registration with the industry association.

While traders believe demand may be strong for CNPC bills because they have obtained top credit ratings, they think the spread between medium-term bills and government bonds will widen in coming months as investors become more risk-averse and concerned about the expanding supply of corporate bills and bonds. ($1 = 6.83 yuan) (Reporting by Karen Yeung; Editing by Edmund Klamann)