SHANGHAI -- China's No. 2 carrier China Eastern Airlines is raising as much as 50 billion yen ($453 million) via a bond offering in Tokyo in a move that reflects warming relations between Beijing and Tokyo.
China Eastern will issue the debt on the Tokyo Stock Exchange's professionally oriented Pro-Bond market, according to an announcement Friday from the Shanghai-based carrier, becoming the first Chinese commercial enterprise to do so. The float will come in multiple tranches.
Japanese megabank Sumitomo Mitsui Banking Corp. as well as two state-owned Chinese banks will provide credit support. China Eastern will hold an informational meeting for institutional investors on Monday.
The airline received approval for the issue from Chinese authorities at the end of last year. "If bilateral relations had not improved, it would have taken more time," said a financial industry insider.
DBJ Securities, a group company of the state-owned Development Bank of Japan, is serving as one of the joint lead managers. China Eastern, SMBC and other participants anticipate demand from asset managers ahead of the March-end book closings.
The guarantees by multiple banks are seen not only attracting regional Japanese financial institutions and other smaller players, but also helping to cap the interest rate of the float.
