ADB's 1st RMB bond listed on HK stock exchange

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The first Renminbi-denominated bond issued by the Asian Development Bank, worth 1.2 billion yuan (180 million U.S. dollars), debuted on Hong Kong stock exchange on Friday, making it the first publicly-listed bond to be traded and settled in RMB.

The Manila-based Asian Development Bank (ADB) confirmed the listing. Named ADB CNY N2010, the bond is coded 86001. Its lot size is 500,000 yuan each. Trading of the bond is settled by the clearing system under the Hong Kong Monetary Authority.

ADB said the bond would provide a long-term pricing reference for other borrowers.

The 10-year-term bond, carrying an annual coupon of 2.85 percent, has been oversubscribed more than two times, which led to an increase of the issue size from 1 billion yuan to 1.2 billion yuan, the bank said.

"The bond will act as a useful benchmark for other potential borrowers, helping develop the offshore RMB bond market into an important source of funding for borrowers as well as an investment destination," said ADB vice president Bindu Lohani.

Since China nodded sales of RMB-denominated bonds in Hong Kong in July 2007, there have been about 30 issues of bonds and Certificates of Deposit totaling approximately 49 billion yuan. Most bonds issued so far have had a tenor of two to three years with the longest maturity being five years.

ADB's issue also marks the first offshore Renminbi bond from a "AAA" rated entity and the first by a supranational borrower, said the bank.

The joint lead managers of the issue were Deutsche Bank AG, Hong Kong branch and Bank of China (Hong Kong) Limited.

ADB said it would mainly use the proceeds of the bond to finance its projects in the Chinese mainland, notably in clean energy including wind power, water treatment and infrastructure.

ADB has sold two other Renminbi-denominated bonds, both in the onshore Chinese mainland market. It debuted 1 billion yuan of RMB- denominated bond in October 2005 and a subsequent 1-billion-yuan issue in December 2009.

Chief Executive of the Hong Kong Monetary Authority Norman Chan had welcomed the issuance of RMB-denominated bond by ADB.

"These issuances will not only add top quality issuers in Hong Kong's Renminbi bond market, but also demonstrate the importance attached by international financial institutions to the development of an offshore Renminbi platform in Hong Kong and their interest in using Hong Kong to raise Renminbi funding," Chan said in a statement.

The Renminbi bond market was part of the on-going efforts to develop Renminbi business in Hong Kong, said the statement.

The amount of bond issuance has increased over the years, from Renminbi 10 billion yuan in 2007, 12 billion yuan in 2008, to 16 billion yuan in 2009, it said.

The range of issuers has also expanded over time, from mainland

financial institutions at the beginning, to the Chinese Ministry of Finance and the mainland subsidiaries of Hong Kong banks in 2009, and further to Hong Kong and multinational corporations and international financial institutions this year.

To date, apart from the Ministry of Finance, the issuers that have issued or launched Renminbi bonds in Hong Kong included China Development Bank, China Export and Import Bank, Bank of China, Bank of Communications, China Construction Bank, HSBC (China), Bank of East Asia (China), Hopewell Highway Infrastructure Limited, McDonald's, Asian Development Bank and International Finance Corporation.

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