Bank of China Hong Kong (BOCHK) Asset Management has signed an agreement with Citigroup to market its bond fund to pension and retail investors in Europe.
Under the deal, BOCHK Asset Management will move a high-return bond fund worth USD 165 million from Cayman Islands to Luxemburg, while Citi will sell the fund through the US bank’s platforms.
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The fund, which complies with European rules and regulations, will invest in offshore renminbi high-yield bonds. It seeks to generate 8% yield to income-starved investors in European markets by capitalizing on the growing use of the yuan by corporations interested to trade with China.
BOCHK Asset Management said that it plans to boost the fund without revealing the boosting scale.
Additionally, BOCHK is also planning to win direct pension fund mandates in Europe as well as launch more funds.
Au King Lun, CEO of BOCHK Asset Management, said: "We are very pleased to have this partnership with Citi and think this is the best way for us to expand in Europe because Citi has a bigger footprint in Europe.
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By GlobalData"Investors require education because the asset class is new. Doing the currency swap is a very vanilla, bread-and-butter operation in our business," he added.
King Lun also added that BOCHK Asset Management, which has $7.7 billion in assets under management, will eventually expand into the US.
