OREANDA-NEWS. November 20, 2013. China Development Bank (hereinafter referred to as "CDB") recently issued 4.5 billion yuan worth of dim sum bonds, exceeding the planned 3 billion yuan.

This issuance includes three tranches. The two-year tenor tranche, with a floating-rate, raised 1.9 billion yuan and offers a coupon rate at the three-month average of the new CNH Hong Kong interbank offered rate plus 20 basis points. Around 1.7 billion yuan of the sum raised will go to the five-year tranche, with a fixed rate at 3.6 percent, and 900 million yuan will go to the 15-year fixed-rate bond offering 4.5 percent returns. Although there was a provisional increase in the issuance in respond to the enthusiasm of investors, they were oversubscribed by 1.22 times. Thus far, CDB has totally issued 23.5 billion yuan of offshore bonds, becoming the biggest offshore bond issuer from the mainland which boasts the broadest range and most innovations.

CDB deputy president Zhang Xuguang said the successful issuance was attributed to the recent upward trend in China's economic development and reflected optimism among overseas investors. According to him, it was also the result of unremitting efforts and coordination of all involved parties in HK. Responding to the central government's requirement to develop the offshore bond market, CDB has been committed itself to: increasing the issuance and types of the bonds; expanding and deepening the bond market in HK; playing its role as a model; and further boosting the position and competitiveness of the offshore RMB centre.

Zhang said with the leadership of the Central Committee of the Communist Party of China (CPC) and the State Council, generous support from supervising authorities in HK and the mainland, and joint efforts of all market players, the position of HK as the center of the international financial market and the offshore RMB centre would be further consolidated. During the process, CDB will bring its experiences from the onshore bond market into full play and depend on the advantage of HK being the offshore RMB centre to further facilitate the accommodation and development of the markets in HK and the mainland and to make its due contribution to the prosperity and development of HK.

With approval from Beijing, CDB has established a 7 billion yuan Debt Issuance Programme to sell offshore RMB bonds and introduced bonds of multiple terms and innovative types as well as long-term notes through book building under the framework. This 4.5 billion yuan of issuance was characterized with quickness, innovation and expansion. Firstly, driven by cooperation between the financial sectors in HK and the mainland, CDB was firstly got approved and initiated the first round of debt issuance programme. Secondly, it was the first time to publicly issue the two-year floating-rate bond, which raised 1.9 billion yuan and offers a coupon rate based on the new CNH Hibor.

This innovative move has gained generous support from some overseas monetary authorities including the Monetary Authority of Macao, and will expand the application of CNH Hibor in the offshore RMB markets and facilitate the development of the benchmark reference rate for offshore RMB. Based in HK, the issuance has covered overseas investors and received 1 billion yuan of subscription from Taiwanese investors and placed over 500 million yuan for investors in ASEAN countries for the first time, in respond to the requirement of the central government to "build an investment & financing cooperation system in Asia".

An a result of the strength and efforts of the co-lead banks, investors' enthusiasm in subscription of CDB's offshore bonds reflects the booming demand in the dim sum bond market. The co-lead banks and book-runner for the issuance include HSBC Holdings PLC, Standard Chartered PLC, Barclays PLC, BOC Hong Kong (Holdings) Ltd., ABC International Holdings Ltd., Hong Kong Branch of Bank of Communications Co., Ltd., CCB International (Holdings) Ltd., ICBC (Asia) Ltd., and ICBC International Holdings Ltd.