Hong Kong – The transaction saw issuer Bank of China, Hong Kong Branch price a US$500 million Reg S 3-year senior fixed rate Yulan Bond at T+67 bps. The reoffer yield was 0.859% and the coupon was set at 0.750%. The transaction achieved the lowest reoffer spread, yield and coupon to date for a US$ 3-year fixed rate bond issue by a Chinese bank. Investors were supportive of the transaction and the final order book surpassed US$1.2 billion, a 2.4x oversubscription. Asia investors were allocated 94% of the bonds with EMEA investors representing the balance of 6%. Investors included banks, asset/fund managers and central banks.
Citi acted as the joint global coordinator and book runner on the inaugural issuance of Yulan Bonds, which was priced on January 28, while also providing complete custody services for the issue.
Yulan Bonds are a new initiative created by Euroclear and the Shanghai Clearing House and named after the city of Shanghai's official flower. They are designed to provide Chinese issuers with access to greater liquidity by connecting them with the global investment community.
"This is a landmark transaction and Citi is proud to be the lead manager for the first Yulan bond issuance. With strong underwriting capabilities and custody services, we look forward to helping more Chinese issuers take advantage of the Yulan bond channel to raise capital from international financial markets," said Catherine Wang, Asia Pacific Co-Head of Financial Institutions for Citi's Corporate Bank.
Citi has been at the forefront of facilitating access to China for global investors for many years and, through its Euroclear membership, is able to support investors interested in debt instruments such as Yulan Bonds. To enhance client transactions, Citi has put in place all the necessary arrangements to ensure seamless Legal Entity Identifier Registration for those investing in the bonds as well as providing complete settlement services.
"We're glad to be one of the first custodian banks to be able to facilitate Yulan Bonds for global investors. Citi has been a pioneer in China with a long history of supporting investors to access China as its capital markets open up," said Harry Peng, Citi's China and HK Securities Services Head. "As one of the first QFII custodian banks for China, we have built robust China access capability for our clients facilitated by a number of licenses that we have acquired recently including China domestic custody approval, a China bond settlement agent license, and a futures margin depositary license. These factors coupled with our Hong Kong custody, agency securities lending, and prime finance capabilities in Stock Connect and China A-share structured products, mean that Citi is able to deliver a complete range of China access solutions to its global institutional clients."
With over $24.9 trillion1 of assets under custody and administration and the industry-leading proprietary network spanning over 60 markets, Citi Securities Services provides clients with in-depth local market expertise, advanced processing technologies and a wide range of custody and fund services that can be tailored to meet clients' needs.
1 As of Q3 2020
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
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