OREANDA-NEWS. October 03, 2014. ICBC will exclusively sell the 52nd-issue financial bonds of the China EXIM Bank (China EXIM Bank) in 2014 (hereinafter referred to as EXIM-Bank bonds) to retail and non-financial institutional clients.

The EXIM-Bank bonds sold this time are one-year discount bonds with the par value at RMB 100. According to the bidding results in the interbank bond market, the issue price of the bonds is RMB 95.87 per par value, equivalent to an annualized return of 4.31%, 131 basis points higher than the benchmark interest rate of the one-year time deposit.

Relevant head of ICBC said that since the People’s Bank of China (PBOC) released on March 28 an announcement to bring in new bond products, including China Development Bank (CDB) bonds, policy bank financial bonds, government-backed China Railway Corporation institutional bonds, to the OTC bond market of commercial banks, ICBC has played a leading and exploratory role.

The Bank was the first among peers to launch CDB financial bonds in May and China EXIM Bank financial bonds in June, which offered a new investment and trading option with stable return and strong liquidity to retail and non-financial institutional investors. It is the second time that ICBC has sold the OTC bonds of China EXIM Bank and the product selected is the well-received discount bond among investors. This type of bond has no nominal interest rate and is issued at a price lower than the par value and repays the principle at the par value upon maturity. The difference of the par value and issue price is equivalent to interest income of the bond. The term of discount bond is usually short. Compared with other bonds, investors buying the discount bonds in the same par value will pay less.

Customers may only log into ICBC internet banking, mobile banking, dial telephone banking, or go to the banking outlet, use the fund account designated for bond trading and open a bond custody account. In this way, customers can subscribe to the EXIM-Bank bonds. For example, an ICBC internet banking customer can log into the internet banking, enter the column of “Online Bonds”, click the “Buy” button on the right side of bond to be subscribed under the section of “market and trading”, follow the instructions, and then finish the subscription. After the issue period, the EXIM-Bank bonds will be listed for circulation. Customers can also buy or sell EXIM-Bank bonds at anytime during the trading hours through ICBC E-banking channels and banking outlets, with the real-time clearing of transaction funds.

In addition, according to rules of bond issuing document, the China EXIM Bank has to open the bond custody account in China Central Depository and Clearing Co., Ltd. (hereinafter referred to as CCDC) which will be in charge of registration, custody and redemption of the current bonds. As the OTC bond underwriter, ICBC will distribute bonds in the distribution period. CCDC will act as tier-1 custodian, while ICBC will act as tier-2 custodian. Since the start of this year, CCDC has offered strong support for the launch of new products in the counter bond market. At present, all book-entry T-bonds, CDB bonds, and China EXIM Bank bonds on the OTC bond market of commercial banks have been mandated primarily by CCDC.