Offshore yuan bonds issued in Singapore

Updated: 2013-05-28 06:52

By Wang Xiaotian (China Daily)

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Two major international lenders launched the first batch of offshore yuan-denominated bonds in Singapore on Monday, making the country the third offshore hub for such notes and consolidating its standing as an international financial center.

On the same day, the Industrial and Commercial Bank of China's Singapore branch kicked off yuan clearing services in the island nation.

Standard Chartered PLC announced that it had raised 1 billion yuan ($163.36 million) through the offshore bonds. The three-year senior unsecured issuance was priced with a coupon of 2.625 percent after generating more than 3 billion yuan in orders from 75 investors across Asia.

HSBC said it had issued 500 million yuan of two-year fixed rate notes on the market, with yields of 2.25 percent. The funds will be used to finance the bank's expansion of yuan-based lending assets, said Matthew Cannon, head of global markets at HSBC Singapore.

Singapore-based DBS Group Holdings Ltd is also expecting to launch its first offshore yuan bond issue in the country shortly.

"We see this as another milestone for Singapore in the development of its status as an offshore yuan hub," said Ray Ferguson, chief executive officer of Standard Chartered Bank Singapore.

He said the country's contribution to the development of the yuan is further enhanced by the issuance, as it already leads as a regional treasury center, and was a springboard to Southeast Asia along the key trade corridor with China while providing a hub for Asian wealth management and commodities trading.

Guy Harvey-Samuel, group general manager and CEO at HSBC Singapore, said apart from the "historic" bond issue, the bank has also completed a number of other yuan transactions for its customers in Singapore through the new yuan-clearing facility.

Magnus Bocker, CEO of Singapore Exchange, said the exchange will keep growing and enhancing its suite of yuan and China-related products and services as Singapore's role as an offshore yuan center becomes increasingly important.

According to the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, in terms of the value of offshore yuan payments, Singapore ranked second last month following the United Kingdom in regions excluding Hong Kong and the Chinese mainland.

China and Singapore doubled the size of their currency-swap arrangement to 300 billion yuan in March, one month after the Chinese central bank approved the Singapore branch of ICBC as its clearing bank.

As of June 2012, deposits of the currency in Singapore stood at about 60 billion yuan.

The yuan has become the 13th most-used currency overall with an all-time high market share of 0.74 percent, and payments denominated by the currency grew in value by 32.7 percent, in comparison with the average increase of just 5.1 percent across all currencies, according to SWIFT.

(China Daily USA 05/28/2013 page13)