The Asia Development Bank has achieved a landmark Rmb1.2bn (US$180mn) issuance that brings with it a number of never-before seen elements in such a transaction.
The transaction is the first offshore renminbi (Rmb) bond issuance by a supranational; the first Rmb bond issuance rated triple-A by all three major ratings agencies; the first such transaction listed on the Hong Kong stock exchange and the first long-dated offshore Rmb bond.
“We expect to see the market in Hong Kong for Rmb bonds grow quickly in coming years."
Recently, offshore Rmb bonds have had tenors of five years or less, however, ADB’s boasts a 10 year maturity, making it the longest bond issued in the market.
Furthermore, the deal was originally set for Rmb1bn (US$150), but was oversubscribed due to extra demand.
The bond carries an annual coupon of 2.85% and was split with 60% of investors coming from Asia and the remaining 40% from Europe.
Monish Mahurkar, head of local currency capital markets at ADB’s treasury department, tells GTR: “We were very pleased with the response of investors to the offering. It helped us that this was the first was the first Rmb bond available internationally, not just in Hong Kong, that is was a 10 year maturity and was the first from a multilateral institution.”
“We expect to see the market in Hong Kong for Rmb bonds grow quickly in coming years,” Mahurkar adds.
Deutsche Bank and Bank of China were joint lead managers of the issue, while Citi has been appointed as paying agent, lodgement agent, registrar and transfer agent for the deal.
In this role, the US bank will provide a number of services to ADB such as liaising with bondholders and the Hong Kong monetary authority’s settlement agency and processing principal and interest payments until maturity.
“Citi congratulates ADB on their successful landmark Rmb bond issue. Citi is well positioned to support this innovative transaction and is excited to work with clients as they access they access the growing offshore Rmb market,” notes Ben Lumleysmith, director, regional head agency and trust, Asia Pacific, GTS at Citi.
The transaction was advised by law firm Allen and Overy.
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