Standard Chartered Bank and the International Finance Corporation (IFC) traded the first USD/CNH cross-currency swap referencing the one-year CNY Loan Prime Rate (LPR) and the six-month USD Libor in Hong Kong. The LPR USD/CNH cross-currency swap is a tailor-made hedging solution allowing IFC to offer local currency lending in China in support of the LPR index.

As China continues to liberalize its interest rates framework with the LPR as the newly dominant benchmark interest rate since 2019, Standard Chartered has been working closely with clients both within mainland China and offshore markets to provide bespoke hedging solutions amid rising interest rates volatility. The successful conclusion of the transaction provides a good foundation for the development of the CNY LPR market, according to the bank.

John Thang, Standard Chartered’s head of financial markets for Hong Kong & Greater Bay Area, says: “We are pleased to work with IFC on this ground-breaking transaction, supporting the IFC’s lending activities in mainland China with this customized and innovative solution. We look forward to exploring more of such opportunities as we leverage on our strengths in the CNH market to meet our clients’ cross-border trade and investment needs.”

Standard Chartered is a major participant in the CNY derivatives trading market, claiming a leading market share among international banks. It is one of the 18 LPR fixing panel banks in China, a primary dealer for China government bonds, and a leading market maker in both CNY and CNH markets.