Bank of China is pricing the largest offshore renminbi bond offering in two and a half years via its Macao branch.
The Financial Times reports that the 4 billion yuan (approx. USD$634 million) deal is the biggest since August 2015, when a sudden devaluation of the renminbi shook domestic and overseas markets.
The size of the new deal may signal a restoration of faith in renminbi assets amongst overseas investors, following a sustained rise in the exchange rate against the dollar.
Moody’s has rated the bonds as A1, while Fitch and Standard & Poor’s have given it an A grade.
The new offering is comprised of 2.5 billion yuan in three year notes yielding 4.65%, and 1.5 billion yuan in one year notes yielding 4.45%, with proceeds raised to be used for general funding purposes.
In addition to BoC, HSBC, DBS Bank and KGI Asia acted as joint book runners.
In addition to dim sum bonds that are sold offshore, the Chinese central bank also hopes to expand foreign access to the domestic bond market via the issuance of “panda bonds”