OREANDA-NEWS. March 27, 2014. China Development Bank (CDB) officially announced that it had successfully issued 1 billion yuan of 3-year RMB bonds in Hong Kong at an interest rate of 3.35% and a 1.87x subscription ratio. Industry sources said that the CDB bond issue is a dazzling recent addition to the supply on the offshore RMB market and has boosted market confidence.

In November 2013 CDB was the first bank given approval for a total bond issue limit of 7 billion yuan in Hong Kong and it successfully issued the first tranche of 4.5 billion yuan. This time CDB has utilized the remaining issue limit at the request of ASEAN investors, and the issue has the following three characteristics: 1) Developing the ASEAN market while focusing on Hong Kong.

The issue has brought into effective play Hong Kong's leading role as an offshore RMB center in the region and successfully brought about enthusiastic participation by investors from a number of ASEAN countries (accounting for 70%). It has responded to the central government's requirement for "building an Asian investment and financing cooperation system" while pushing forward the internationalization of the RMB. 2) Continually enlivening the market with serial debt issuance. In order to facilitate routine debt issuance, CDB took the lead in establishing an Offshore RMB Debt Issuance Program at the end of 2013 and twice issued bonds in Hong Kong within six months.

Through fair pricing and market-oriented offering, CDB has successfully stabilized the yields in Hong Kong debt issuance and has also laid a good foundation for future debt issuance by PRC-funded institutions. 3) Demonstrating CDB's strength with speed and efficiency. For this bond issue, it took CDB just 3.5 business days to complete the process from starting the project to completing its pricing, winning acclaim from overseas investors and fully demonstrating the advantages of name recognition enjoyed by CDB as a quasi-sovereign grade bond issuer and a leading RMB bond market player in Hong Kong.

According to CDB Vice President Zhang Xuguang, the fact that this bond issue was well received by overseas investors has fully demonstrated their favorable view on the Chinese economy and the RMB's stability as well as their full confidence in CDB's future development. Going forward, CDB will continue to serve the national development strategy, provide investors with quality products and services with sound performance and innovative excellence, continually increase the depth and breadth of the offshore RMB bond market, and make contributions in building a "great circle" of offshore RMB.

Since its first RMB bond issue in Hong Kong in 2007, CDB has issued cumulative 24.5 billion yuan of bonds in Hong Kong with an outstanding balance of 11.5 billion yuan, making it the largest RMB bond issuer in Hong Kong with the largest outstanding balance and the best bond varieties. For all of its bond issues, CDB has received great support from the regulators, financial institutions, and intermediary institutions in both mainland China and Hong Kong. For this issue, CIMB Group and Barclays Bank are Joint Global Coordinators while CIMB Group, Barclays Bank, ICBC Singapore Branch, and Bank of Communications Hong Kong Branch serve as Joint Lead Managers and Bookrunners respectively.