Shandong Energy Group Co,. LTD. (SDEG) is a large state-owned energy enterprise group of Shandong Province, newly incorporated in July 2020, upon an agreed merger between the former Yankuang Group and the former Shandong Energy Group. It is a state-owned capital investment company underpinned by “six major business segments”－Mining, Electric Power, High-end Chemical Engineering, High-end Equipment Manufacturing, New Energy and New Material, and Modern Logistics and Trade. It is also the most international energy supplier all over China and the only one such company listed on four listing platforms in both China and beyond (Shanghai, Hong Kong, Australia, New York).
On November 23, 2021, SDEG successfully issued a three-year US$500 million senior unsecured overseas US dollar bond, on the Hong Kong Stock Exchange (hereinafter referred to as the "Issuance"), with a coupon rate of 2.9%.
Since the beginning of 2021, the coal supply and demand has been greatly heightened, and the coal price has been on the rise, causing a nation-wide energy crunch. In order to thoroughly implement a series of decisions of the CPC Central Committee and the State Council on ensuring coal supply, and to practice targeted instructions of CPC Shandong Provincial Committee and Shandong Provincial Government on securing power supply, SDEG has sprung into action to establish a special coal supply task-force, taking multiple steps to coordinate the supply of resources at home and abroad. It has also formulated an energy supply plan and a coal storage plan and taken science-based approach to secure coal supply.
As the world’s energy sector is switching to be greener, the global coal industry is pressured to transform, and all global companies are facing severe covid-induced challenges, SDEG has tackled all difficulties head-on, standing on a new starting point to sprint forward, which coincided with this issuance.
New Development Strategy---Entering into Oversea Bond Market
It is of strategic importance for SDEG to conduct its first issuance in the oversea bond market after the reorganization, which not only contributes to the improvement of the bond yield curve but also showcases Shandong Energy’s confidence and determination in fully implementing the new development strategy and embracing changes at the new stage. Putting equal emphasis on both inventory optimization and increment leap, SDEG will remain committed to developing the “six major business segments” , namely coal mining, coal-fired power, coal chemical, high-end equipment manufacturing, new energy and new materials, and modern logistics and trade. The issuance at the opening year of 14th Five Year Plan not only presented SDEG’s development achievements and sound credits to the international finance market but also was one step forward in globalization.
New Low for Bonds Cost, New High for International Development
The yield rate has been registered as 2.9%, representing the lowest for comparable transactions in the energy industry. During the issuance, SDEG closely monitored market dynamics, successfully identified and secured a favorable issuing opportunity in a highly volatile market. By actively conducting sales promotion, SDEGhas further broadened its access to financing in the international capital market. On the day of pricing, SDEG launched the transaction at an initial yield rate being 3.3%. After the launch, the book peak value surpassed USD1.5 billion, which was more than three times that of the book coverage. Based on the strong book performance, the final price of the transaction narrowed 40 basis points and the yield rate was adjusted to 2.9%, representing the lowest for comparable transactions in the energy sector and the record low in terms of SDEG’s oversea bond yield rate.
New Scale of Financing, New Journey for Shandong Energy
The issuance of USD 500 million bonds hit a historical record in amount among energy industry. The roadshow of the issuance was a complete success and many institutional investors including well-established oversea funds and assets management companies, insurance companies and banks participated. SDEG has been highly recognized by both domestic and oversea investors for its strength. Besides, SDEG’s brand image has been further improved in the international capital market, laying a solid foundation for following capital operation.
At the heart of everything we do is General Secretary Xi Jinping’s future-oriented call to “enhance the strength, quality and size of State-owned Companies”. Eyeing both domestic and global markets, we are driven to be a global clean energy supplier and world-beating energy enterprise. We do this by focusing on “six major business segments” and by enhancing our competitiveness, innovation, influence, risk-resistance and control over sectors we are responsible for. We are now sprinting to realize both total assets and operating revenues all up to RMB 1 trillion, by the end of the 14th Five-Year Plan (2021-2025).
