HSBC launching London's first offshore yuan bond: IFR
HONG KONG/SHANGHAI (Reuters) - HSBC Holdings PLC plans to issue a yuan-denominated bond in London on Wednesday, the first such issue in the city, marking a milestone in London's efforts to become a centre for offshore yuan trading alongside Hong Kong.
The term sheet said the issue was a benchmark deal, implying it is worth at least 500 million yuan ($79.4 million). In the offshore yuan market, a 200 million yuan issuance is considered a good-sized deal.
HSBC, which IFR said was also the sole lead on the deal, was not immediately available for comment.
The planned issue comes amid significant reforms by Beijing to push ahead with internationalization of the yuan, including a widening of the yuan's trading band to 1 percent from 0.5 percent that went into effect on Monday.
Chinese regulators this month also increased the quota for the Renminbi Foreign Qualified Institutional Investor (RQFII) program, which allows Hong Kong investors to purchase yuan-denominated funds using yuan accumulated offshore, to 70 billion yuan from 20 billion yuan.
London is just starting to build itself up as a centre for trading in offshore yuan after an agreement between the British and Chinese governments last year, but deposits there are starting to reach a critical mass necessary for the development of a yuan bond market.
Customer and interbank yuan deposits in London totaled 109 billion yuan at the end of 2011, according to a report published by the City of London Corporation on Wednesday.
However, that is far less than the 566 billion yuan in renminbi deposits in Hong Kong as of February, suggesting Hong Kong will remain the most important offshore yuan centre for some time to come. Continued...