Beijing Energy has chosen to include a standby letter of credit (L/C) in its debut US dollar-denominated bond.

Analysts suggest this may be one of the last such deals, as the Chinese authorities grow increasingly concerned about these so called L/C enhanced bond issues.

Preferential rating

Rather than attempting to obtain a rating for its bond, the state owned utility has opted to enhance the issue by backing it with a standby L/C from the Agricultural Bank of China International (ABCI).

This has provided Beijing Energy with a deal rated A1, in line with ABCI's rating.

Safeguards

Some analysts reckon the utility would have merited an investment grade rating in its own right and could have issued bonds a standalone basis.

But the issue also has several other safeguards built into it, suggesting the state utility wanted to ensure a successful debut issue.

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