Source: Xinhuanet

06-27-2007 08:59

China Development Bank (CDB) announced Tuesday that it will issue five billion yuan (about 657 million U.S. dollars) RMB bond in Hong Kong, which is the first Chinese currency bond to be launched outside the Chinese mainland.

The two-year bond, which will be synchronously sold to institutions and individual investors from June 27 to July 6, yields three percent annually. The return is relatively high compared to the 0.7 percent interest rate for six-month deposit here, with the anticipation of RMB appreciation.

The minimum subscription for an individual investor is 20,000 yuan, and at least one billion yuan of the bond is targeting at retail investors.

The joint lead managers and book runners for the bond issue are Bank of China (Hong Kong) and the Hong Kong and Shanghai Banking Corporation Limited. The distributors comprise of 14 placing banks with branches in Hong Kong, including Bank of Communications, China Construction Bank (Asia), Dah Sing Bank, and The Bank of East Asia.

The bond did not apply for independent ratings. CDB Governor Chen Yuan explained that despite the bank's on-going market-oriented reform, CDB will adhere to its mission of helping to achieve the government's goals, and "our debt rating will also remain intact."

CDB is China's largest policy bank and solely owned by the Ministry of Finance. It has been raising capital by issuing bonds since 1998, and has been given sovereign ratings by Moody's, Standard and Poor's and Fitch Ratings.

Analysts say both Hong Kong and the mainland could benefit from floating RMB outside the mainland.

"The issuance of RMB bonds here will strengthen Hong Kong's status as an international financial center," Ma Delun, assistant governor of the People's Bank of China, said at the launch ceremony of the bond.

The issuance of renminbi bonds in Hong Kong signifies the city's role as the country's premier international finance center, giving local investors more choice, said Henry Tang, financial secretary of the Hong Kong Special Administrative Region government, when addressing the ceremony.