Datang taps markets for growth

By Alison Leung and Emma Graham-Harrison

BEIJING (Reuters) - China's second-largest listed electricity provider, Datang International Power Generation Co. Ltd. (0991.HK: Quote, Profile, Research, Stock Buzz), plans to raise $1 billion by selling commercial paper and asset-backed securities (ABS) this year to help bankroll a 60 percent capacity surge over the next six years.

Vice President and Executive Director Yang Hongming said at the Reuters China Century Summit that the power firm was embarking on a large expansion program that would lift capacity to 30 gigawatts from 18.8 gigawatts now.

The power giant plans to sell 4 billion yuan ($504 million) of short-term commercial paper next week and 4 billion yuan of ABS -- secured by power tariff incomes -- before the end of the year, Yang said.

"China's power market has entered a phase of steady growth, and demand should rise at a rate of 1.1 to 1.2 times of GDP growth," he said, forecasting power consumption would increase 11 percent in 2007 on top of a projected 12 percent rise this year.

In 2005 China's electricity output rose 13.3 percent from a year earlier.

In 2007, Datang will spend 3.5 billion yuan, and 2.5-3.0 billion yuan in 2008, mainly for capacity expansion.

Datang hoped to push ahead by the end of the year with a planned issue of new yuan-denominated A-shares on mainland markets, raising up to 6 billion yuan and helping lower a net gearing ratio of over 200 percent as of end-June.

"The gearing has peaked and will come down next year," Yang said. Datang's debt rose sharply after spending 4.2 billion yuan last year and 3.2 billion yuan this year on capital expenditure.  Continued...