Photo/Zhang Yun (NBD)

Jan. 16 (NBD) -- Warren Buffett-backed Chinese carmaker BYD (002594.SZ) has gained approval from the China Securities Regulatory Commission to issue corporate bonds with an aggregate principal amount of not more than 10 billion yuan (1.5 billion U.S. dollars) to qualified investors, the company said Wednesday in a regulatory filing. 

The bonds will be issued in tranches, with the first lot to be issued in 12 months as of the approval date of the issuance. 

According to the previously announced proposal on the bonds issuance, the corporate bonds have a term of no more than 10 years. Proceeds from the issuance will be used to supplement the working capital, repay borrowings and other lawful purposes.

With regard to the public concerns over the company's capital chain following the news of the bonds issuance, a source with BYD's Office of the Secretary to the Chairman said to media outlet Securities Times that issuing bonds is not a signal of financial strain, but a normal practice amid a company's fast growth to guarantee the adequacy of working capital. It is beneficial to improve the company's debt structure, and more importantly, the company's liability ratio hasn't changed much, the source added. 

Data shows as of the end of the third quarter of 2019, BYD reported 6.687 billion yuan of non-current liabilities due within one year, with the asset-liability ratio narrowing down from the year-ago period but reaching 68.48 percent. But the amount of short-term borrowings jumped up 13.79 percent to 43.001 billion yuan from the level at the end of 2018. 

Email: gaohan@nbd.com.cn