OREANDA-NEWS. May 16, 2014. Based on the current OTC Account T-bond, ICBC will issue China Development Bank bonds (“CDB bond”) to retail and non-financial institutional customers, becoming the first commercial bank to sell CDB bond to the public.

The CDB bond is a one-year fixed-rate bond with a coupon rate of 4.5%. Customers can subscribe through ICBC internet banking, mobile banking or at ICBC outlets. Previously on March 28, 2014, the People’s Bank of China published an announcement introducing CDB bond and other new bond types at counters of commercial banks.

According to officials with ICBC, to subscribe for CDB bond, customers can open or designate the capital account for bond trading and the custodial account of bond by logging into ICBC internet banking or mobile banking, or visiting ICBC outlets during the issuing period. For example, personal internet banking customers may enter “Online T-bond Service” after logging into ICBC internet banking, select “2014 Issue XII Financial Bond of China Development Bank” in the “Market and Transaction” section, click “Buy” and operate as instructed to finish subscription. After the end of the issuing period, CDB bond will be in circulation. Customers can buy or sell it anytime during the trading hours through ICBC internet banking, mobile banking or outlets. The transaction fund will be settled on a real-time basis. In the future, ICBC will offer innovative OTC bond categories such as bonds of policy banks and government-backed bonds of China Railway Corporation.

The CDB bond is exposed to low credit risk, with RMB 100 as the starting point of investment and the minimum increasing unit. In addition, the bond is tradable anytime during the trading hours, providing more liquidity than ordinary wealth management products and higher returns than savings deposit. It offers a new investment option for customers pursuing soundness. Customers can also benefit from bid-ask spread by leveraging market price movements.

OTC bond, a RMB bond investment product offered by banks through e-banking and outlets, is featured by safety, liquidity, low transaction threshold and good returns. In the past, only bond-entry T-bond could be traded over the counter of commercial banks. Now, the introduction of CDB bond and other new types represents a major move by the People’s Bank of China to develop inclusive finance, which provides the individual and non-financial institutional investors wanting to invest in bonds with more diversified choices. For bond issuing bodies, the ability to distribute bonds and conduct bond deals via bank channels may help diversify investors, broaden financing channels, lower financing risk and provide better financial support to real economy. For the bond market, commercial banks’ market-making of more bond types over the counter will translate into improvement in multilayer market system as well as greater development potential.