Bank of China International (China), China International Capital Corporation and CITIC Securities will manage the sale of the bonds, which are priced to yield 4.85 percent, a banker said.

The sale is likely to be a hit with mainland investors, who will be attracted by the bond's government guarantee and are starved for alternatives.

Neither the paltry interest paid by the country's banks nor the dismal returns offered by Chinese stocks are attractive. Insurance companies are likely to be lured by the bond's long payout period, since they have long-term liabilities to meet.

Long-term bonds are a scarce commodity on the mainland, since investors are skeptical of the ability of many Chinese companies to service debt over that long a period.

This year has seen four 15-year issues - from Bank of China, Datang Group, China National Nuclear Corp and Guangdong Communications - according to Dealogic. That's equal to the number sold in 2002. Last year only China Southern Power Grid sold 15-year bonds, while 2003 saw two such sales.

``There are not enough bonds in the market,'' said Liu Wei, deputy head of debt capital markets at CITIC.

The railroad ministry earlier this year said it would spend more than 100 billion yuan on rail infrastructure, including completing over 2,000 kilometers of new lines and starting work on another 1,000 km. This year's planned capital expenditure would be almost double that of 2004.

The ministry is also buying diesel locomotives and signaling equipment from US-based General Electric Transportation Systems (China).

On a normal day, China's rail network can barely handle the flood of cargo produced by China's booming manufacturers. The system reaches the breaking point during the Lunar New Year when millions of migrant workers abandon their adopted homes on the eastern seaboard and return temporarily to their families inland.

In addition to selling debt, the ministry is also looking for corporate and foreign investment.

Separately, market sources said the government plans to increase the annual ceiling on bond sales, set earlier this year at 50.2 billion yuan, since mainland companies have already sold just over 30 billion yuan worth.

Beijing has encouraged debt sales recently, particularly short-term paper, to take some of the pressure off the country's debt-burdened banks, the traditional source of credit for most mainland firms. tim.leemaster@singtaonewscorp.com