HSBC sells first Yuan Bonds in Singapore, StanChart to follow

SINGAPORE (Reuters): British bank HSBC sold 500 million Yuan (US$ 81.54 million) worth of two-year notes in Singapore on Monday, launching the first dim sum bond in the city state since Yuan-clearing became available there. China has been relaxing controls on the Yuan, officially referred to as the renminbi or RMB outside the country, in order to gradually increase the use of its currency abroad.

Industrial and Commercial Bank of China has begun Yuan-clearing in Singapore, the world’s fourth-largest forex trading centre and the main Asian base for oil and commodity traders. Separately, Singapore Exchange on Monday launched depository services for Yuan-denominated bonds, otherwise known as dim sum bonds, in a bid to support Singapore’s development as an offshore hub for issuers and investors of Yuan-denominated bonds.

Yuan-clearing was already available in Hong Kong and Taiwan, and previously, much of the Yuan activity in Singapore had to go through Hong Kong where Yuan transactions could be cleared by Bank of China. HSBC Singapore global markets head Matthew Cannon said, proceeds from the Yuan notes, which offer investors a yield of 2.25%, will be used to finance the bank’s expansion of Yuan-based lending assets.

“This issuance will help open the market to other issuers looking to fund themselves internationally in RMB, offer new investment opportunities to the substantial pool of wealth managed in Singapore and assist in funding the rapidly growing RMB-denominated trade business in Asia,” he said, referring to the Yuan by its official name which is the renminbi or RMB.

HSBC’s earlier pricing means it has beaten rival Standard Chartered to the punch. Standard Chartered on Monday offered a benchmark-sized issue of three-year notes. Book-building for the Standard Charted notes has closed with an indicative yield of 2.75% to 2.875%, IFR reported on Monday.

Besides HSBC and Standard Charted, DBS Group is also planning to issue Yuan-denominated bonds. Singapore’s largest lender announced its plan on Thursday but has yet to launch the debt securities. China’s Yuan hit a record high against the Dollar on Monday, for the seventh time this month, after the Central Bank set the midpoint at its strongest level.