Bank of Communications, the mainland's fifth-largest lender, will offer an annual interest rate of 3.25 per cent on its planned yuan-denominated bonds which lenders predict will be well received by investors.
Analysts said that given expectations that the yuan will appreciate another 5 per cent or more during the next 12 months, investors could receive a total return of more than 8 per cent in the first year.
The mainland bank plans to sell 3 billion yuan (HK$3.42 billion) worth of two-year yuan bonds in the city starting next week.
'The coupon [of 3.25 per cent] was fixed after considering a number of factors, including market demand and the appreciation of the yuan,' Reuters quoted sources as saying.
The interest rate was 10 basis points higher than a two-year yuan bond issued by Bank of China in September last year.
'I think it's reasonable as mainland interbank rates have risen compared with last year,' said Stanley Wong Yuen-fai, an executive director and a deputy general manager at ICBC (Asia).
