China Railway Corp may soon issue its first batch of bonds after it was founded in March, as railway construction across the country slowed down due to inadequate funds, 21st Century Business Herald reported.

“This year’s quota for China Railway in railway construction bonds is 150 billion yuan, the same as last year,” said an anonymous source. “And the company has already registered medium term notes worth 60 billion yuan, which will be issued soon.”

The State-owned giant has taken over the business operations of the defunct Ministry of Railways (MOR). According to its Q1 financial report, it borrowed 100.9 billion yuan in the first quarter, accounting for two-thirds of its investment funds and among which 80.9 billion yuan are bank loans. Based on bank loan figures last year and this year’s budget, the company may have used 40 percent of the bank loan quota for the whole year. If it is not the loans, the cash flow will collapse in no time.

China Railway reported total losses of 7 billion yuan at the end of the first quarter, and the prospect for the next quarter is gloomy due to a downturn in the coal industry and the continuing macro economic recession.

Rail transport of cargo has been badly hit by shrinking demands on coal, said professor Hu Siji from Beijing Jiaotong University. For China Railway, revenue decreases, but the spending cannot be avoided.

According to the Ministry of Railways, China will invest 650 billion yuan in fixed assets in 2013, most of which are follow-up funds for construction of projects nationwide. But the tight supply of money is hindering the progress of construction.

“The company has too many projects going, and they all need money, and now it’s the second month of the second quarter, but the company has not taken any financing measures,” an insider said. “If we don’t issue the bonds immediately, cash flow will soon be depleted.”