China will sell yuan bonds in Hong Kong
By Lydia Chen |
August 17, 2011, Wednesday
|
Print Edition
Print Edition
CHINA'S Ministry of Finance is expected to sell 20 billion yuan (US$3.1 billion) in bonds today in Hong Kong, the third and so far largest issue of yuan-denominated bonds in the city.
Vice Premier Li Keqiang, who started a three-day visit to Hong Kong yesterday, will attend the sale ceremony as China promotes the internalization of its currency.
The sale includes 5 billion yuan in two-year bonds for individual investors. Institutional investors can choose to buy any of the 6 billion yuan three-year notes, 5 billion yuan five-year notes, 3 billion yuan seven-year notes and 1 billion yuan 10-year notes, according to the ministry.
The three-year bonds are expected to yield about 0.7 to 0.9 percent while the five-year debt may be offered in a range of 1.2 to 1.5 percent, Bloomberg News cited unnamed sources as saying yesterday.
The ministry had raised a combined 14 billion yuan from two previous sales of the so-called dim sum bonds in Hong Kong in 2009 and 2010.
Dim sum bonds refer to those that are yuan denominated and issued in Hong Kong. Dim sum bonds are attractive to foreign investors who desire exposure to yuan-denominated assets, but are restricted by China's capital controls from investing in domestic Chinese debt.
This year's institutional sale will be conducted via a Dutch auction starting at 9am today while the sale to individual investors will begin tomorrow via outlets of local participating banks and should be completed by the end of this month, according to Bloomberg News.
A Dutch auction is where the auctioneer begins with a high asking price which is lowered until a participant accepts the auctioneer's price, or a predetermined reserve price is reached. The winning participant pays the last announced price.
The Bank of Communications in Hong Kong will be responsible for the sale to institutional investors.
The Bank of China, HSBC Holdings Plc, Standard Chartered, the Agricultural Bank of China, Bank of Communications, the Industrial and Commercial Bank of China and China Construction Bank are running the sale to individual investors.
Vice Premier Li Keqiang, who started a three-day visit to Hong Kong yesterday, will attend the sale ceremony as China promotes the internalization of its currency.
The sale includes 5 billion yuan in two-year bonds for individual investors. Institutional investors can choose to buy any of the 6 billion yuan three-year notes, 5 billion yuan five-year notes, 3 billion yuan seven-year notes and 1 billion yuan 10-year notes, according to the ministry.
The three-year bonds are expected to yield about 0.7 to 0.9 percent while the five-year debt may be offered in a range of 1.2 to 1.5 percent, Bloomberg News cited unnamed sources as saying yesterday.
The ministry had raised a combined 14 billion yuan from two previous sales of the so-called dim sum bonds in Hong Kong in 2009 and 2010.
Dim sum bonds refer to those that are yuan denominated and issued in Hong Kong. Dim sum bonds are attractive to foreign investors who desire exposure to yuan-denominated assets, but are restricted by China's capital controls from investing in domestic Chinese debt.
This year's institutional sale will be conducted via a Dutch auction starting at 9am today while the sale to individual investors will begin tomorrow via outlets of local participating banks and should be completed by the end of this month, according to Bloomberg News.
A Dutch auction is where the auctioneer begins with a high asking price which is lowered until a participant accepts the auctioneer's price, or a predetermined reserve price is reached. The winning participant pays the last announced price.
The Bank of Communications in Hong Kong will be responsible for the sale to institutional investors.
The Bank of China, HSBC Holdings Plc, Standard Chartered, the Agricultural Bank of China, Bank of Communications, the Industrial and Commercial Bank of China and China Construction Bank are running the sale to individual investors.
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