China Development Bank planning sale of 3b yuan bonds
China Development Bank, a former policy lender on the mainland, plans to sell as much as 3 billion yuan (HK$3.4 billion) worth of yuan-denominated bonds in Hong Kong by the end of the month, sources say.
The bank would sell the bonds, which have a two-year maturity, between July 28 and August 14 with an expected coupon rate of more than 2 per cent but lower than the 2.8 per cent of this month's Bank of East Asia (China) issue, they said.
BEA's 3 billion yuan bond sale, which also has a two-year maturity, will close tomorrow.
CDB had appointed HSBC Holdings and Bank of China (Hong Kong) to handle its bond sale together with at least 14 placing banks, sources said.
Market observers said the sale was unlikely to be as popular as the bank's first issue in the city in 2007 because of the new, more lengthy sales process for retail subscribers.
BEA's yuan bond sale was the first deal under a new rule which took effect this month requiring banks to make more detailed risk presentations to customers and record sales activities to avoid a repeat of the controversy over the sale of Lehman Brothers-linked minibonds.
A veteran banker said the 'confusing' risk rating on the bonds could frustrate investors as it varied at each placing bank instead of being set by the regulator or an independent agency.
'Regulators should address the issue. Otherwise, how can Hong Kong maintain its status as an international financial centre?' the banker said.
Frederick Chan Hoi-kit, a general manager at Chong Hing Bank, said the bank took fewer subscriptions of BEA bonds than for previous yuan bond sales due to the lengthy subscription process.
'I hope the sale process runs more smoothly for the next [yuan bond sale],' he said, adding that it took at least an hour to handle a subscription for the BEA bonds.
Mr Chan expected investors to be interested in the CDB bonds if they carried an attractive interest rate.
