Chalco tests waters with new renminbi perpetual bond

[SINGAPORE] Aluminum Corporation of China (Chalco) is considering a ground-breaking perpetual renminbi bond in a move that will test investors' belief in continued state support for the country's highly indebted state-owned companies.

The undated deal would be a first in the offshore renminbi market, but Chalco's third perpetual in the last 12 months. The struggling aluminum producer, China's largest, has already turned to the US dollar market twice in the last year to boost a balance sheet that shows short-term liabilities far exceeding its cash position.

While overseas investors snapped up those securities at relatively low yields, lured by Chalco's government backing, a new issue would test their belief in the state's support following an unprecedented default in China's domestic bond market last month.