Policy bank sells 'dim sum' bonds

PUBLISHED : Thursday, 12 January, 2012, 12:00am
UPDATED : Thursday, 12 January, 2012, 12:00am


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The Agricultural Development Bank of China, one of the mainland's largest policy banks, sold 3 billion yuan of 'dim sum' bonds on Tuesday.

Dim sum bonds are yuan-denominated bonds issued in Hong Kong. It was the first time the fully state-owned agriculture policy bank had issued bonds in the city, and the first time that yuan bonds issued by a mainland financial institution had been listed on the Hong Kong Stock Exchange.

Wang Tong, deputy general manager of global markets BOC Hong Kong, one of the lead managers and book runners for the bond, said the city remained an attractive destination to raise funds because of its cheaper costs.

ADBC sold 2.1 billion yuan of two-year bonds with a 3 per cent coupon, 550 million yuan of three-year bonds with a 3.2 per cent coupon rate, and 350 million yuan of five-year bonds with a 3.5 per cent coupon.

The coupon rate for the two-year bonds are about 50 basis points, or half a percentage point, below what the bank would have offered on the mainland. The three-year bonds were about 30 basis points cheaper.

The bank has received a dim sum bonds issuance quota of 6 billion yuan for this year. Lin Fei, deputy general manager of the funds planning department at ADBC, said the bank would sell more bonds later this year when the time was right.

The bonds did not receive ratings, but ADBC has credit ratings on par with China's sovereign debt credit rating from the largest rating agencies.

The bank's non-performing loan ratio, which is bad loans divided by total loans, reached 1.46 per cent last year. The bank had total assets of US$274 billion at the end of 2010.

ADBC was founded in 1994 and is under the direct administration of the State Council.

It plays a vital role in ensuring food safety. It receives most of its funding through the central bank, corporate and government deposits and bond issuances.