Banking

Bank of China HK to launch offshore RMB bond index

(Xinhua)
Updated: 2010-12-21 10:39

HONG KONG - Bank of China (Hong Kong) Limited is expected to launch the "Bank of China (Hong Kong) Offshore RMB Bond Index" on Dec 31, the first offshore RMB bond index in Hong Kong, the bank said Monday in a statement.

The offshore RMB bond index includes those offshore RMB bonds with relatively high liquidity based on a set of pre-defined criteria on constituent bonds selection. This RMB denominated bond index is designed to track the total-return performance, including accrued interest as well as capital gains and losses of offshore RMB bonds.

The index includes 28 constituent offshore RMB bonds worth some 54 billion yuan ($8.1 billion) in total at launch, representing around 90 percent of the market universe in terms of value, according to the statement.

The index will try to provide the market with the highest transparency in respect of the pre-specified eligibility criteria of constituent bonds, index calculation methodology, daily composition and valuation.

David Wong, deputy chief executive of Bank of China Hong Kong, said that the introduction of the offshore RMB bond index has a significant meaning for the market.

"To better meet the market's needs, Bank of China Hong Kong is introducing the RMB bond index in Hong Kong, which will further improve the RMB bond market system and provide an objective benchmark of the bond market's performance. It will also facilitate the transaction and circulation of RMB bonds and the stable development of RMB bonds market in Hong Kong," he said.

Since July 2007 when the Chinese mainland nodded sales of RMB denominated bonds in Hong Kong, a total of 27 batches of offshore RMB bonds amounting to 62.1 billion yuan were issued in Hong Kong.

Bank of China Hong Kong was the lead manager and bookrunner, placing bank, market maker, fiscal agent, paying agent or custodian in such issuances. It is the dominant player in the Hong Kong RMB bond market in its role as the lead manager and bookrunner for 20 of these issuances.

Bank of China Hong Kong is also the largest market maker in the RMB bond market, facilitating liquidity in the secondary market and leveraging on its professional trading capabilities.

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Wong said the RMB bond market will continue to grow in a steady manner and investors can benefit from the macro-economic growth of China's mainland by investing in this market. Bank of China Hong Kong was appointed as the sole clearing bank of RMB banking business in Hong Kong by the People's Bank of China, or the central bank, on Dec 24 of 2003.

On July 13 this year, it was authorized as the clearing bank of RMB banknotes business for China's Taiwan.

Bank of China Hong Kong, established in October 2001, is one of the three note issuing banks in Hong Kong along with HSBC Hong Kong and Standard Chartered Bank Hong Kong.