OREANDA-NEWS. March 26, 2014. China Development Bank (CDB) issued follow-on offering for CDB 1301 (6 billion yuan) and CDB 1302 (2 billion yuan) through the issuing system of the Shanghai Stock Exchange (SSE). Bidding from the underwriting group determined the reference yields at 4.97% for CDB 1301 and 5.28% for CDB 1302 respectively, with subscription ratios of 2.0x and 2.7x respectively.

With the approval of the People's Bank of China, CDB has a total bond issue limit of 30 billion yuan on the SSE to be completed by June 2014. The underwriting group for CDB's financial bond issue on the SSE is composed of 47 financial institutions including 15 listed banks, three insurance companies, and 29 securities firms. The lead underwriters for the two follow-on bond offerings are the Industrial and Commercial Bank of China, the Agricultural Bank of China, the China Construction Bank, Citic Securities, Orient Securities, and Donghai Securities.

CDB issued the first tranche of its policy financial bonds including CDB 1301 and CDB 1302 on 27 December 2013. CDB 1301 has an original maturity of 2 years with a 5.80% coupon rate, reaching a balance of 14 billion yuan after the follow-on offering. CDB 1302 has an original maturity of 5 years with a 5.84% coupon rate, reaching a balance of 6 billion yuan after the follow-on offering. Institutional and individual investors on the SSE may take part in the distribution of the bonds through members of the underwriting group or participate in secondary market trading after the completion of the offerings.

The first follow-on offering on China's bond market was issued by CDB in March 2002. CDB began to issue regular follow-on offerings for key term fixed-rate and floating-rate debt in April 2012 in order to improve the liquidity of the bonds, promote price discovery, and form the "Fuwa Debt" and "F4" lines. CDB's current follow-on offering on the SSE has introduced the mechanism for follow-on bond offering into the SSE's bond market.