Standard Chartered Bank said on Monday that it sold Rmb1 billion ($157 million) of three-year, renminbi-denominated bonds, becoming the first issuer to tap the country’s domestic bond market after the International Monetary Fund agreed to add the renminbi to its reserve currency basket.
The sale of so-called panda bonds follows similar-sized deals from HSBC and the Hong Kong unit of Bank of China in September, making the Asia-focused British lender the third foreign commercial bank to raise funds in the Chinese domestic market.
On December 1, the IMF admitted the renminbi into its benchmark currency basket, becoming the fifth currency after the US dollar, pound, euro, and yen. It marked a victory for Beijing's campaign for recognition as a global economic power. Implementation of the new Special Drawing Rights basket will start on October 1, 2016 and the renminbi will have a 10.92% weighting.
To help the development of the onshore bond market, the People’s Bank of China is drafting a new set of rules to cover renminbi-denominated bonds sold by foreign companies, to give issuers more flexibility over how they use the proceeds inside and outside of China.
Standard Chartered will use the newly raised proceeds for its offshore business.
“This is another step forward in opening up China’s capital account,” May Tan, chief executive officer of Standard Chartered Hong Kong, said in a statement. “Being able to tap the Rmb44 trillion-onshore bond market for renminbi provides us a fund-raising alternative to the offshore market.
By investor type, banks snapped up 57% of the order, while asset managers, securities houses, and trusts accounted for 21%, 16% and 5%, respectively. The final order book of the deal was oversubscribed by nearly two times.
Citic Securities is the lead underwriter, with Standard Chartered China and Bank of China as co-underwriters. The other underwriters include Agricultural Bank of China, Industrial and Commercial Bank of China, Bank of Communications, China Development Bank, Guotai Junan Securities, China International Capital and Haitong Securities.