Air China Ltd has scrapped a planned share sale and is preparing its first debt offering in more than three years, capping a 10-month period in which bond sales were almost 25 times greater than stock issuance.

The country's biggest carrier by market value will offer 6 billion yuan ($961 million) of seven-year securities on Oct 31, according to a company filing. It last sold 3 billion yuan of 3.48 percent 2014 paper in March 2009, according to data compiled by Bloomberg. China National Aviation Holding Co, the parent of the carrier, also plans to sell 1 billion yuan of three-year notes on Oct 29.

Premier Wen Jiabao's calls to expand the market drove a 64 percent increase in bond sales to 3.18 trillion yuan, while equity issuance dropped 55 percent to 129 billion yuan as the world's second-largest economy slowed. Yields on top-rated companies' 10-year notes fell 10 basis points to 5.08 percent this year, as the country's benchmark stock index shed 4.5 percent. They dropped 44 basis points to 1.65 percent in the US, according to Bank of America Merrill Lynch indexes.

"Air China's moves show a trend that the bond market has become increasingly popular for fundraising over the equity market," Zhou Meng, a Shanghai-based analyst at Shenyin & Wanguo Securities Co, said in a phone interview on Oct 24. "It's a good time for airlines, shipping companies and rail builders to tap the bond market as borrowing costs are lower."

Air China announced the planned sale two days after scrapping a planned private stock offering. It has also yet to complete a 1.05 billion yuan share sale to its state-owned parent and the timing for a second non-public equity offering isn't "ripe at the moment," it said in a filing to the Shanghai stock exchange on Oct 22. The Beijing-based carrier will use proceeds from the notes to repay bank loans and replenish working capital, according to separate company filings.

"The bond market has demand as the risk appetite is pretty low now with stocks falling," said Li Jun, a strategist at Central China Securities Co in Shanghai. "On top of that, the central government has encouraged bond sales to increase the proportion of direct financing."

Equity sales in China have shrunk this year as the benchmark Shanghai Composite Index heads for a third-straight annual loss.

Shares of Air China have slumped 20 percent this year in Shanghai as high fuel prices have added to investor concerns.

The carrier won't resume discussions on the planned share sale within three months, it said in the Oct 22 filing.

Bloomberg