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Companies

US banks underwrite ChemChina bonds despite Pentagon watchlist

State-owned giant undeterred by label as Chinese military company

ChemChina's new bonds are underwritten by major U.S. and European institutions like Bank of America and BNP Paribas.   © Reuters

NEW YORK -- ChemChina has issued new offshore bonds with the help Goldman Sachs, Barclays and other leading Western financial institutions, despite being placed on a list of "Communist Chinese military companies" by the U.S. Defense Department last month.

Officially called China National Chemical Corp., the state-owned chemical maker raised a total of roughly $3 billion through dollar- and euro-denominated bonds.

In addition to Goldman and Barclays, the underwriters include Bank of America, BNP Paribas and UBS.

ChemChina dismissed concerns about the Defense Department designation in its prospectus, assuring investors that the listing has no impact on its ability to make payments, according to intelligence provider International Financing Review.

ChemChina is the first state-owned company to stage a large-scale offshore bond issuance after receiving the designation, and the move could inspire others to follow suit.

In June, the Defense Department published a list of 20 companies operating in the U.S. that it alleged were controlled by the Chinese military, including Huawei Technologies. ChemChina was among 11 added to the list at the end of August.

Companies on the list are not automatically restricted from dealing with U.S. businesses, but could face sanctions in the future.

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