China Development Bank issuance to lift confidence in dim sum bonds

China Development Bank plans to issue at least 2.5 billion yuan (HK$3.1 billion) worth of dim sum bonds over the next 12 months in a move that should shore up market confidence in offshore yuan debt following a dearth of issues since July.

The state policy lender, a key player in Beijing's plan to grow offshore yuan business, yesterday sold 4.5 billion yuan of offshore bonds - known as dim sum bonds - in Hong Kong in the biggest single deal since the city started issuing such notes in 2007.

"Part of CDB's intention is to shore up confidence and make this market more liquid," said Wang Tong, a deputy general manager of global markets at Bank of China (Hong Kong), one of the joint lead managers and bookrunners of the deal.

The notes were sold at cheaper-than-expected costs on the back of hot demand from central banks and asset-management firms in the Middle East, Asia and even Africa, Wang said.

"The coupon of the five-year tranche is 150 basis points lower than onshore notes with similar tenor, reflecting healthy demand in the offshore yuan market," he said.

The offering was 1.5 billion yuan larger than CDB's initial plan, after it received orders of more than 1 billion yuan from Taiwanese investors and more than 500 million yuan from investors in Southeast Asia.

The 4.5 billion yuan issuance includes three tranches, of two, five and 10-year tenors. Wang said the lender had also considered 30-year notes, but only a few life insurance companies had placed orders.