China Development Bank (CDB) will sell the first-ever
renminbi-denominated bonds in Hong Kong today, demonstrating the
central government's efforts to strengthen the special
administrative region's status as an international financial hub
and broaden the yuan market.
The one-week offer beginning today is available to both
institutional and retail investors. The two-year bonds, with a
maximum size of 5 billion yuan, including a minimum of 1 billion
yuan for retail investors, carry a coupon rate of 3 percent per
annum, CDB said in a statement.
The funds raised from the offering will be used to finance
China's "key infrastructure projects", said Chen Yuan, CDB's
governor, adding that the bank's mandate to help achieve the
government's development goals will not change.
The long-awaited issue of renminbi bonds coincides with the 10th
anniversary of Hong Kong's reunification with the mainland and
marks a financial cooperation milestone between Hong Kong and the
mainland, Henry Tang, Hong Kong's Financial Secretary, said at the
launch.
"The issue of renminbi bonds in Hong Kong strengthens the
complementary and interactive relationship between the two
financial systems on a mutually beneficial basis. It also provides
solid testing ground for the renminbi in international financial
transactions," Tang said.
The joint lead managers and bookrunners for the bond issue are
Bank of China (Hong Kong) and HSBC.
The distributors comprise 14 placing banks with branches in Hong
Kong, including Bank of Communications, Bank of China (Hong Kong),
China Construction Bank (Asia), CITIC Ka Wah Bank, HSBC, the
Industrial and Commercial Bank of China (Asia), Nanyang Commercial
Bank, Standard Chartered Bank (Hong Kong), Wing Hang Bank and Wing
Lung Bank.
The minimum subscription for an individual investor is 20,000
yuan (US$2,626.22).
Though there is still debate about quota size, the offering
received warm applause in the city.
"The quota is moderate considering the handful of yuan deposits
in Hong Kong," said Paul Tang, chief economist of Bank of East
Asia.
"However, the symbolism behind the liberalization is more
important than the pragmatic effect. Also, we expect the quota will
be further extended, alongside other kinds of yuan businesses, such
as overseas settlement," he said.
Daniel Chan, senior investment strategist for DBS Bank (Hong
Kong), told China Daily that the quota for the first batch
of yuan-denominated bonds is sufficient to quench market
demand.
(China Daily June 27, 2007)