THE People's Construction Bank of China (PCBC) wrapped up the first mainland H-bond issue yesterday in a $1.2 billion deal that one arranger says reflects Hong Kong's ability to compete with the Japanese and United States markets. The $1.2 billion floating-rate note (FRN) deal was arranged by the Hong Kong branch of Bayerische Landesbank, Chemical Securities Asia, HSBC Markets, Sakura Finance Asia and the Hong Kong branch of Union Bank of Switzerland. The five joint lead managers each took $105 million of the issue. An FRN is an issue of debt securities in which investors are paid a floating rate of interest - in this case 75 basis points (0.75 percentage points) over the three-month Hong Kong interbank offered rate. A H bond is a Hong Kong dollar bond issued by a mainland borrower and normally listed on the Hong Kong Stock Exchange. The issue price was par, giving an all-in yield of 81 basis points, and the FRNs will be listed in Hong Kong and cleared through the Central Moneymarkets Unit. Andrew Fung of HSBC Markets said: 'It's a very successful deal in the sense that most of the deals this year that have been approved by the State Administration for Exchange Control have been done in the Japanese market.' But this issue in Hong Kong dollars had attracted four European lenders, three American, five Japanese, six local banks and one mainland bank. 'The diversity of the group reflects the strength of the appetite for this issue and for this issuer,' Mr Fung said. The joint lead managers had each taken $105 million of the issue, he said. 'In terms of international participation, mainland banks enjoy an advantage in going to the Hong Kong-dollar market over the Samurai market, which is basically limited to Japanese houses and institutional investors,' he said. 'Hong Kong can stand as a competitive market against the Samurai market and the Yankee market.' A Samurai is a yen-denominated bond issued in Japan by a non-Japanese entity and a Yankee is a US dollar bond issued in the US by a non-US borrower.