CDB lists dim sum bonds worth 6b yuan on HKEx

PUBLISHED : Saturday, 04 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 10:58pm


China Development Bank listed six billion (HK$7.36 billion) worth of yuan-denominated bonds on the Hong Kong stock exchange yesterday, giving investors an opportunity to trade securities with a maturity of up to 20 years.

The so-called dim sum bonds are listed on the Hong Kong stock exchange and also carry maturities of three years, five years and 15 years.

The bank's issue takes the number of yuan-denominated bond listings since 2007 to 41, worth 50 billion yuan. It is expected to boost Hong Kong's offshore yuan market and diversify the bond pool.

'CDB's bond listing will enhance yuan liquidity in Hong Kong,' said Charles Li Xiaojia, chief executive of the Hong Kong Exchanges and Clearing.

Li said the exchange would continue to improve and simplify listing procedures for dim sum bonds.

The bonds were sold through three issuances this year, the latest taking place last week when the bank sold 2.5 billion yuan worth of bonds with three-year and 20-year tenors.

More than 60 per cent of CDB's bonds sold this year were allocated to investors in Europe, the Middle East and Africa. Central banks around the globe are increasingly holding yuan-denominated assets to diversify their foreign-exchange reserves.

'The response we received shows investors' confidence in China's long-term economic stability,' said Wang Tong, deputy general manager of global markets at Bank of China (Hong Kong), which managed the bond sale.

The Agricultural Development Bank of China became the first issuer to list yuan bonds in 2007 in Hong Kong. The Ministry of Finance, Baosteel and several mainland banks have followed suit.

CDB issued its first offshore yuan bond in 2007. Since then, the bank has issued bonds worth a total of 19 billion yuan in Hong Kong.

Investor enthusiasm for the mainland currency and related products has declined since November, with yuan deposits in the city falling for five straight months as hopes for its appreciation faded. Deposits picked up again in June by 0.7 per cent from a month earlier to 557.7 billion yuan. The yuan spot rate has depreciated about 1.5 per cent against the US dollar in the first half of this year.

Nathan Chow, a DBS bank economist, said he did not expect the yuan to depreciate drastically against the US dollar. Compared with other economies, he said, China's mid- to long-term economic prospects were positive.