Hong Kong: China’s ministry of finance (MoF) launched a roadshow in Hong Kong on Monday for a 20 billion yuan offshore bonds, lead underwriter Bank of Communications said.
The bank confirmed in a statement what sources had told Reuters earlier in the day.
The deal marks the ministry’s third issue of ‘dim sum’ bonds – yuan-denominated debt issued outside China -- and is bigger than the previous two tranches combined, which reached 14 billion yuan.
China has taken a series of steps to promote the use of the yuan overseas and internationalize the currency.
Top officials from major Chinese banks and central government were expected to attend a ceremony next week for the launch of the offer, underscoring Beijing’s determination to build Hong Kong into an offshore yuan trading hub, sources told Reuters earlier on Monday.
Analysts say the ministry’s latest offer would likely draw strong demand from institutional investors due to growing risk aversion following Friday’s downgrade of the US sovereign rating by Standard & Poor’s (S&P).
Frances Cheung, senior strategist at Credit Agricole CIB, said the offer and other Asian bonds could benefit from the resulting potential for asset reallocation.
The finance ministry’s offer consists of a 15 billion yuan institutional tranche with maturities ranging from 3 to 10 years, and a 5 billion yuan retail tranche over two years, the Bank of Communications said.
The institutional tranche is split into 3-year 6 billion yuan, 5-year 5 billion yuan, 7-year 3 billion yuan and 10 year 1 billion yuan tranches, Thomson Reuters markets service IFR said.