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BOC Hong Kong, HSBC print landmark Panda bonds
Bank of China (Hong Kong) and HSBC both announced on September 29 the successful issuances of landmark onshore renminbi bonds in China’s interbank bond market (also known as Panda bonds), each amounting to one billion renminbi (US$157.5 million) – the first foreign financial institutions to issue such bonds in the mainland
Chito Santiago 2 Oct 2015
Bank of China (Hong Kong) and HSBC both announced on September 29 the successful issuances of landmark onshore renminbi bonds in China’s interbank bond market (also known as Panda bonds), each amounting to one billion renminbi (US$157.5 million) – the first foreign financial institutions to issue such bonds in the mainland.
 
Both transactions are for three years and carry similar coupon of 3.5%. HSBC says its bonds are rated AAA by China Chengxin International Credit Rating Company and are lead-managed by HSBC (China), CITIC Securities and Bank of Communications.
 
The BOC HK bonds are also rated AAA by China Bond Rating Company and were underwritten solely by Bank of China Limited.
 
Alexi Chan, global co-head of debt capital markets at HSBC, says the landmark transaction sets a precedent for global borrowers seeking to diversify their funding sources in the renminbi market. “China’s onshore market offers enormous potential, and the opening up of the market presents a significant opportunity for both international issuers and Chinese investors.
 
Yue Yi, vice-chairman and chief executive of BOC HK, says the deal not only opens a new funding source for the bank, but also sets a precedent for other foreign institutions which plan to tap the mainland capital markets.
 
He says the further liberalization of China’s capital market marks a historic milestone as it is a key initiative in promoting the internationalization of the renminbi.
 
BOC HK received the approval from the People’s Bank of China on September 22 to issue financial bonds of not more than 10 billion renminbi in China’s interbank bond market. The issuance limit is so far the largest granted to international commercial banks in the domestic market in the mainland.
 
The proceeds raised from the bonds will be used for offshore general working capital purpose, such as supporting those mainland enterprises going global and projects related to “One Belt, One Road” initiative. It also provides a long-term and stable stream of funding for BOC HK’s sustainable development.
 

HSBC says the increasing prevalence of foreign issuers in mainland China highlights the appeal of the country’s vast bond market, already the third largest in the world, at a time when market access continues to improve and onshore yields become progressively more attractive to issuers. 

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