ADB prices first international Renminbi Bond

The Asian Development Bank (ADB) today 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.
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.
"This bond will act as a useful benchmark for other potential borrowers, helping develop the offshore renminbi bond market into an important source of funding for borrowers as well as an investment destination," said Bindu Lohani, Vice President (Finance and Administration) at ADB.
The bonds carry an annual coupon of 2.85% 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.
"We are very encouraged by the support that the Ministry of Finance of the PRC, the People's Bank of China and the Hong Kong Monetary Authority have shown to the development of the offshore renminbi bond market and to ADB's offering in particular," said Thierry de Longuemar, Treasurer at the ADB.
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.
Daniel Mamadou, Co-Head of Corporate Coverage and Debt Capital Markets, Asia, at Deutsche Bank, said: "This transaction reflects strong demand for long-dated renminbi assets and bodes well for other issuers seeking renminbi financing in Hong Kong. We remain committed to developing Hong Kong's renminbi bond market by using our global reach to introduce new issuers and grow the international investor base."
David Wong, Deputy Chief Executive of Bank of China (Hong Kong), said: "Asian Development Bank has made an important breakthrough as the tenor of this bond issuance is 10 years. Such long-dated bonds not only help meet the varying needs of investors by offering them more choices, but also have a far-reaching impact on the yield curve. As the sole clearing bank for renminbi business in Hong Kong, Bank of China (Hong Kong), with its solid experience, comprehensive supporting services and extensive banking network, will continue its role as a pioneer in renminbi activities and pro-actively contribute to the gradual development of the offshore renminbi market."
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.
ADB aims to raise approximately US$15 billion from the international capital markets in 2010.