Shenzhen becomes first Chinese city to sell offshore bonds to foreign investors
The Shenzhen government issued 5 billion yuan ($ 774 million) of yuan-denominated offshore bonds in Hong Kong, making it the first city in mainland China to offer overseas debt as Beijing opens more the national financial market.
The bond offering, which closed on Monday, was 2.48 times oversubscribed and attracted subscriptions worth 17.4 billion yuan, the Shenzhen government said at a meeting on Tuesday. . The three bonds had been subscribed by 89 investor accounts such as insurers and asset managers (link in Chinese) from eight countries and regions, including Europe and the Middle East, the government said.
The performance is a satisfactory result, against the backdrop of recent market fluctuations, told Caixin a banker who participated in the underwriting of the bond issue. The bonds, which carry lower coupon rates than similar debts issued on land, have allowed the Shenzhen government to raise funds more cheaply, the person said.
The three bonds have respective maturities of two, three and five years. A portion of the proceeds from the two-year bond, which bears a 2.6% coupon, will finance the construction of secondary schools in Shenzhen. The three-year bond and the five-year bond, which bear a nominal interest rate of 2.7% and 2.9% respectively, will be used to finance green projects in the southern metropolis, such as the construction of clean energy urban rail and sanitation projects. processing facilities, according to the Shenzhen government.
The bonds will begin trading on the Hong Kong Stock Exchange next Tuesday, sources familiar with the matter told Caixin.
The offering will further widen the opening of the Chinese bond market, expand funding channels for local governments, expand the range of yuan-denominated financial products in the Hong Kong market, and consolidate the territory’s position as a hub. world offshore yuan, said Pan Gongsheng. , deputy governor of the People’s Bank of China.
China has accelerated measures to promote a two-way opening between the mainland and Hong Kong. On September 24, China launched the canal to the south a bond connect program that allows certain institutional investors to trade bonds offshore in Hong Kong. The launch of the southbound leg marked the completion of the global two-way Bond Connect program.
In early September, China kicked off cross-border wealth management connect Great Bay Area (GBA) trial program, which allows mainland residents of the nine Guangdong cities of the GBA to invest in certain products sold by banks in Hong Kong and Macau, and vice versa.
To download our app for getting late-breaking alerts and reading news on the go.
To have our free weekly newsletter must read.
You have accessed an article available only to subscribers