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CDB to sell first-ever RMB bonds in Hong Kong
By Lillian Liu and Hui Ching-hoo (China Daily)
Updated: 2007-06-27 11:40
China Development Bank (CDB) will sell the first-ever renminbi
-denominated bonds in Hong Kong today, demonstrating the central
government's effort 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 the SAR and the mainland, Henry
Tang, Hong Kong's Financial Secretary, said at the launch.
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"The issue of renminbi bonds in Hong Kong strengthens the complementary
and interactive relationship between the two financial system 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.
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.
(For more biz stories, please visit Industry Updates)
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