Hong Kong, China (BBN)- The Asian Development Bank (ADB) on Tuesday priced the first international bond denominated in renminbi.
The bond, issued in Hong Kong, China, carries a 10-year bullet maturity and will provide a critical long-term pricing reference for other borrowers.
The bond received strong investor demand and was more than 2 times oversubscribed, leading ADB to increase the size of the issue from CNY1 billion to CNY1.2 billion, an ADB announcement said.
Since the People's Republic of China (PRC) sanctioned sales of renminbi-denominated bonds in Hong Kong, China in 2007, there have been about 30 issues of bonds and Certificates of Deposit totaling approximately CNY49 billion. Most bonds issued so far have had a tenor of 2 to 3 years with the longest maturity being 5 years. ADB's issue also marks the first offshore renminbi bond from a "AAA" rated entity and the first by a supranational borrower.
The bonds carry an annual coupon of 2.85 percent and will mature on 21 October, 2020. The bonds received strong demand through a book building process and were distributed to a broad range of investors around the world.
ADB has applied to list the bonds on The Stock Exchange of Hong Kong Ltd., the first renminbi bonds to be traded and settled on the exchange.
The joint lead managers of the issue were Deutsche Bank AG, Hong Kong branch and Bank of China (Hong Kong) Limited.
The ADB will mainly use the proceeds of the bond to finance its projects in the PRC, notably in clean energy including wind power, water treatment and infrastructure. ADB has sold two other renminbi-denominated bonds, both in the onshore PRC market; its debut CNY1 billion issue in October 2005 and a subsequent CNY1 billion issue in December 2009.
Since 2004, ADB has completed six maiden local currency issues by a supranational entity to support development of Asia's bond markets. Earlier this year, it also sold its first thematic bonds: a Water Bond to support its water-related projects and a Clean Energy Bond to support its efforts to promote clean energy projects.
BBN/SSR/SI-19Oct10-4:05 pm (BST)