ADBC issues first CNH bond to combat deadly coronavirus
Bond attracts large orderbook from top investors around the world
12 Feb 2020 | Derrick Hong

The Agricultural Development Bank of China (ADBC) on February 12 successfully launched a CNH1.5 billion dim sum bond, the proceeds of which will be used to finance the ADBC’s rural revitalization strategy and fund China’s efforts at combating the recent coronavirus outbreak. The virus has so far infected over 45,000 people and caused the deaths of 1,115.

The five-year issue, which bears a reoffer yield of 2.98%, is a tap of its existing 3.400% CNH bonds, due on February 11, 2024, which increases its total outstanding amount to CNH4.5 billion. The tap and existing bonds are listed on the Hong Kong Stock Exchange, the ChongWa (Macao) Financial Asset Exchange (MOX), the Luxembourg Stock Exchange, the London Stock Exchange, and the China Europe International Exchange. The new and existing bonds will be immediately fungible.

The new CNH bond has attracted a large orderbook of high-quality investors, including central banks, from Asia, Europe, the Americas, and the Middle East. With the orderbook 8.3 times covered at its peak, the reoffer yield was 4.3bps tighter than the secondary market yield curve of onshore comparable bonds with similar tenor on the pricing day.

ADBC used a global investor call, instead of a physical roadshow, in marketing its bond for the first time. This transaction is ADBC’s first successful tap of its existing offshore bonds, and it is also the first dim sum bond issuance in the Year of Rat.

The existing bonds were issued in October 2019, representing the largest single tranche issuance of dim sum bonds in the past two years. Following the successful issuance, ADBC re-opened the tranche, which carried much of the rarity value from a tenor perspective.

“To ensure adequate funding levels to support the control and prevention of the coronavirus outbreak, ADBC is playing its role as a policy bank to offer countercyclical support and build an onshore-offshore linkage on bond issuances related to agricultural development. This current issuance 2 followed the successful first anti-coronavirus financial bond and the first “Fight Coronavirus, Alleviate Poverty” dual-themed financial bond issued on the onshore market via Bond Connect in January 2020,” notes ADBC.

Bank of China, Standard Chartered Bank, and Bank of Communications acted as joint global co-ordinators for the deal, while the Agricultural Bank of China (Hong Kong Branch), China Construction Bank, ICBC (Asia), Shanghai Pudong Development Bank, China CITIC Bank International, Mizuho Securities, KGI Asia, Crédit Agricole CIB, and CTBC Bank were joint bookrunners.

Have you read?