China Railway Corp, the new commercial arm of the former Ministry of Railways, plans to issue up to 20 billion yuan (HK$25.1 billion) of fixed-rate enterprise bonds in June, according to three sources familiar with the situation, IFR Asia reported on Friday.

The deal, the debut enterprise bond offering from the newly created entity, has a planned tenor of 10 years, it said.

According to the sources, the proposed transaction is expected to receive approval from the National Development and Reform Commission as early as early next month. The initial price guidance is from 25bp to 75bp, based on the one-year Shibor (Shanghai interbank offered rate), IFR Asia reported.

The issuer has mandated Shenyin Wanguo Securities to be the top lead on the deal, while five other securities houses, namely CDB Securities, Guotai Junan Securities, China Securities, Essence Securities and Citic Securities will be joint leads.

China Life Asset Management will be the finance adviser. Chengxin has rated both the deal and the issuer AAA. Proceeds will be used entirely to fund the company’s railway construction.

Prior to the proposed offering, MoR has issued up to 638.7 billion yuan of enterprise bonds, of which 16.7 billion yuan has already been repaid. The annual interest on the outstanding bonds of 622 billion yuan is 28.97 billion yuan.

On May 23, CRC just offered its debut five-year medium term notes of 20 billion yuan at 4.50 per cent. The former MoR ranks as one of the biggest issuers in China’s domestic bond market, with 764.1billion yuan outstanding.

Earlier this month, China Railway said in a bond prospectus that it had posted an after-tax loss of 6.88 billion yuan (HK$8.7 billion) in the first quarter, compared with an after-tax profit of 196 million yuan for the whole of last year, according to its first bond prospectus.

The state-owned firm said it planned to use proceeds from the five-year bonds to finance rail construction, purchase rolling stock and for general working capital.

The company, established on March 14 with a registered capital of 1.04 trillion yuan, assumed the business operations of the Ministry of Railways after it was broken up.