Industrial and Commercial Bank of China (ICBC) is set to raise Rmb2 billion from a renminbi-denominated bond in London after pricing two-tranche notes in the city.
Pricing is anchored at 3.4% plus/minus 5bp for the three-year tranche and 3.8% plus/minus 5bp for the five-year tranche. The final split between the two portions has not been settled.
“The deal generates strong interest from investors given scarcities of the kind in the market,” said a source familiar with the situation.
Since HSBC issue Rmb2 billion of Dim Sum bonds in April, London has seen several renminbi issues from Chinese issuers.
However, they were overseas units of Chinese banks and most of the products were one-year notes or deposit certificates.
ICBC is the first entity from the mainland to tap the London Dim Sum market.
The two-tranche structure and the high quality of the issuer attracted more investors to participate in the deal, said the source.
The price sensitivity - 3.4% plus/minus 5bp for the three-year notes and 3.8% plus/minus 5bp for the five-year – was lowered from earlier guidance of 3.6% and 4%, respectively, in light of strong appetite from investors, said another source.
As of 2pm on Tuesday, the book amounted to Rmb3.5 billion, meaning it will be at least 1.75 times covered, according to a term sheet acquired by FinanceAsia.
ICBC, the world’s largest bank in terms by market capitalisation, is rated at A1/A/A.
The Dim Sum issue comes after the UK recently tightened its connection with China in renminbi co-operation. Last month, the two markets agreed to promote London as a global hub for the currency.
Under the agreement, Chinese banks will be allowed to set up wholesale branches in London.
London also received a RQFII quota of up to Rmb80bn for UK-based financial institutions to invest in Chinese securities, which will facilitate the usage and circulation of renminbi. The details of the RQFII quota allocation have not been finalised.
ICBC (Asia), ICBC International, ICBC London, JP Morgan, RBS and Standard Chartered are leading the offering. ICBC Singapore and Sinopac Securities are also managing it.