ADB prices first offshore supranational renminbi bond in Hong Kong

The Asian Development Bank can swap the renminbi bond into floating interest rates, subject to market conditions

The Asian Development Bank (ADB) priced the first offshore supranational bond denominated in renminbi today.

The ADB may swap the fixed rate bond into floating interest rates subject to market conditions. The bond, issued in Hong Kong, has a 10-year maturity and an annual coupon of 2.85%.

The bond was more than two times oversubscribed, leading the size of the issue to increase from 1 billion renminbi ($150 million) to 1.2 billion renminbi. The joint lead managers for the issue were Bank of China (Hong Kong) and Deutsche Bank, with the issue co-managed by HSBC and Standard Chartered.

ADB has applied to list the bonds on the Hong Kong Stock Exchange, the first renminbi bonds to be traded and settled on the exchange.

"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 curves," says David Wong, deputy chief executive of Bank of China (Hong Kong).

Since the People's Bank of China permitted the sale of renminbi-denominated bonds in Hong Kong in 2007, there have been about 30 issues of bonds and certificates of deposit totalling approximately 49 billion renminbi in notional, according to ADB.