China's second-largest steel maker, Anshan Iron and Steel (Group), aims to sell 2.5 billion yuan (US$302.1 million) in domestic bonds in October to fund a capacity expansion, an underwriting source said Monday.

Angang is seeking capital to expand and chase booming demand from the world’s top producer, user and importer of the metal, despite official steps to cool red-hot domestic investment in the industry.

Angang, the parent of Angang New Steel Co. Ltd., is expected to win regulatory approval next month to begin selling the 10-year bonds bearing an annual coupon of 4.89 percent, the source said.

It has said it plans to invest 10 billion yuan in the next few years to expand annual capacity by about 50 percent to 15 million tons in 2006 and upgrade technology.

“Funds raised from the issue will go to the investment of new steel production projects,” the source said.

As China tightens its lending policy, it has become increasingly difficult for companies in overheated sectors like steel making to obtain bank loans.

(Shenzhen Daily September 23, 2004)