Standard Chartered has given a Rmb100mn (about US$162mn) to Shenzhen International Holdings, a logistics company.
The one-year facility marks the company’s first cross-border bilateral renminbi (Rmb) loan into the Qianhai region and, says Standard Chartered, highlights the growing number of financing options for Chinese companies.
The loan will be used to develop a project of Shenzhen International’s in the Qianhai economic region, which borders Hong Kong.
Gloria Chow, head of Standard Chartered’s origination client coverage business in Hong Kong, tells GTR that transactions such as these offer Hong Kong’s banking industry “another alternative to deploy their liquidity and offers corporates an alternate fund-raising platform for the Rmb”.
She continues: “It would help the development of a liquid offshore yuan yield curve in Hong Kong, and make the CNH Hibor fixing a creditable benchmark. As there will be interest rate hedging activities alongside with loan drawn down, it will also help the development of offshore Rmb interest rate derivatives products. The scheme also helps to invigorate the flow of Rmb between Hong Kong and Qianhai, taking internationalisation of the Rmb a step further as China slowly opens up its capital account. The move will also strengthen Hong Kong’s position as an offshore Rmb centre.”
Chow says that while it’s difficult to assess the demand for cross-border Rmb loans in Qianhai, the region has the potential to turn into something big. She says: “It could become a window linking yuan fund-flows with the offshore market, and a testing ground for interest rate liberalisation in China. Shanghai’s financial district of Lu Jiazui, for instance, evolved into what it is now from a parcel of undeveloped farm land in the 1990s. Hence, Qianhai, in our perspective, also offers huge potential.”
Gao Lei, chairman of Shenzhen International, says: “We are delighted to sign the first Qianhai cross-border bilateral Rmb loan agreement, which will bring greater development for both parties. We have full confidence in and high expectation of participating in the development and construction of Qianhai project. We plan to focus on developing modern logistics integrated zone, providing high-end logistic services, supply chain information and management, innovative supply chain finance and integrated value chains on this plot of land. We believe that with the support of national policies, the Shenzhen municipal government, the Hong Kong banking industry and Qianhai Management Bureau, together with our experience and capabilities in the logistics infrastructure area, Shenzhen International are capable and confident of making the Qianhai project a success.”