The London Stock Exchange, one of world’s premier listing venues for corporate bonds, now offers issuers of renminbi securities access to a broad base of international investors. (Photo : www.londonstockexchange.com)
The People’s Bank of China (PBOC), China’s central bank, issued on Tuesday, Oct. 20, its first offshore renminbi bond in London, marking a milestone in China’s plans to bolster the offshore liquidity of the renminbi in the U.K., the China Daily Europe reported.
The deal, marked by a lunch in London, coincided with President Xi Jinping's first state visit to the U.K., the report said. The dim sum bonds, worth 5 billion renminbi ($787 million), have an interest rate of 3.1 percent and fall due in 2016.
According to the report, this is the first time that renminbi government bonds have been issued outside China, as part of the effort to open up an offshore renminbi debt market.
The report said that Xiaohui Zhang, assistant governor of the People's Bank of China; Bo Li, director-general of PBOC's Monetary Policy Department; Chris Salmon, an executive director of the Bank of England; and Mark Boleat, chief of policy for the City of London, are expected to attend the event.
The joint global coordinators of the deal are Industrial and Commercial Bank of China (ICBC) and HSBC, while Linklaters acted as legal advisor.
William Liu, Capital Markets partner at Linklaters, said that the bond was issued to increase the supply of high-quality bonds and collateral in the offshore renminbi market, as well as to establish a benchmark interest rate and facilitate renminbi bond issuance and trading.
"It is significant that the U.K. was chosen ahead of possible launches in Europe and the U.S. for the deal and sends a strong signal about the attractiveness of London as a global financial center," Liu said.
In recent years, London issued the first HSBC bond in 2012, and since then has led the way for many offshore renminbi bond issuances in recent years.
Many other banks followed by issuing offshore renminbi bonds in London, with the latest bonds issued by China Construction Bank and Agricultural Bank of China in London earlier this month.
Last year, the International Monetary Fund issued the first ever renminbi green bond in London, a move that China sees as significant, the report added. Green bonds are a special type of debt instrument where the proceeds contribute toward environmentally friendly projects.
PBOC's issuance of the dim sum bond in London came after a series of financial deals between the two countries were announced during the U.K.-China Seventh Economic and Financial Dialogue in September.
