Economy

China launches floating-rate renminbi notes in HK

(Xinhua)
Updated: 2010-10-12 06:13

HONG KONG - China Development Bank (CDB), one of the country's three policy lenders, said Monday it had successfully launched 2 billion yuan ($300 million) of floating-rate renminbi notes, which made it the first financial institution to issue floating-rate RMB notes in Hong Kong this year.

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The 3-year notes, offered to institutional investors, carried a coupon rate of 10 basis points over the 5-day average of three-month Shanghai Interbank Offered Rate and is payable quarterly, the bank said in a statement.

A total of 7 institutions underwrote the notes. Standard and Chartered Bank (Hong Kong) Ltd, HSBC Hong Kong, Bank of China (Hong Kong) Ltd, Hang Seng Bank Ltd, Wing Lung Bank and CCB International (Holdings) Ltd acted as joint lead underwriters and joint bookrunners for the floater. Bank of Communication International Securities Ltd acted as co-lead manager.

Thanks to overwhelming response from investors, the total issue of this floating-rate RMB notes was increased to 2 billion yuan from the original 1.5 billion, said the statement.

It was the fourth time that China Development Bank issued RMB-denominated bonds in Hong Kong since July 2007, when China's central bank permitted mainland-based financial institutions to issue RMB bonds in Hong Kong.

The Shanghai Interbank Offered Rate is a base interest rate system in Chinese mainland's monetary market, proactively established by China's central bank, after drawing on experience of the formation of base rate systems in the international financial market. It is the arithmetic average of inter-bank rates offered by actively quoting banks with high credit ratings.