HSBCs bank sold its first benchmark RMB bonds in London earlier this month with demand outstripping supply by two to one.
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The bank sold three-year RMB-denominated bonds, known as dim sum bonds, priced with a yield of 3%.
The transaction closed with HSBC issuing RMB2bn ($300m) in bonds after booking RMB4bn, the bank said.
It made the UK-based bank the first to launch a RMB-denominated bond outside Chinese sovereign territory.
The sale is seen as cementing Londons position as an offshore trading hub for the offshore Chinese currency. It also underlines the growing importance of renminbi trading in Europe and of private banks investing in RMB-denominated products.
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By GlobalDataThe bonds will be distributed within Europe and Asia, and listed on the London Stock Exchange, aiming to tap the growing pool of RMB liquidity across Europe.
European appetite
The RMB bonds had strong demand from both European and Asian investors with about 60% of the allocation going into European accounts.
This months SWIFT RMB Tracker showed how Europe has quickly adopted the RMB over the past year and excluding China and Hong Kong now represents 47% in RMB payments value, overtaking Asia-Pacific.
"The City of London is actively positioning itself as a next major offshore RMB centre, but the support from Europe for the RMB is broader than that," SWIFT said in a statement.
HSBC co-head of global markets Spencer Lake said: "We are delighted to have priced this trade, which shows the banks commitment to broadening the RMB investor base.
"We are confident that this will open the market to other European and non-European issuers looking to fund themselves internationally in RMB and help contribute to this rapidly developing market."
London positions itself as hub
HSBCs bond issue coincided with a new initiative to develop London as an international RMB hub.
HSBC expects the international RMB bond market to reach RMB1trn within three years as the demand for RMB-denominated assets continues to grow.
HSBCs strategy aims to promote London as a hub of products and services, complementing Hong Kong, and seizing some of the significant opportunities which this new market represents, the bank said.
HSBC group chief executive Stuart Gulliver said: "We are proud to be able to issue this bond. It represents another step in Londons development as a premier international trading centre for the renminbi and is an early sign of the huge potential that this market represents."
Wealthy show interest
Private banks are a major buyer of dim sum bonds, although their investment into RMB as a currency is still at an early stage.
Research published by HSBC last year showed private banks were one of four key investment groups buying up dim sum corporate bonds, accounting for almost 30% of McDonalds bond issue.
In a feature on base currencies (see p13), Didier Duret, chief investment officer ABN AMRO Private Banking, says while private clients are acknowledging that the Chinese currency will have a more internationalised market, they are also admitting that this process is slow.
