HSBC Adds to Hong Kong's Global Banking and Finance Role with 4.5 Billion Yuan Panda Bond

HSBC joins the share and repartition of 4.5 billion Yuan panda bond, bolstering Hong Kong's position as a global offshore Yuan hub for Yuan internationalization.

With 4.5 billion Yuan (US$623 million) from a three-year panda bond, HSBC is helping reinforce Hong Kong's position as an important offshore center for renminbi transactions. This issuance is part of a 10 billion Yuan bond program approved by China’s central bank, which was 1.88 times oversubscribed. The funds aim to attract global bankers and investors, with proceeds allocated back to development projects in Hong Kong.

The note priced at 2.15% annual coupon was rated the highest possible rating, that is, triple-A by the China Chengxin Credit Rating Group. It is the first time the HSBC issues such debt after the Chinese authorities eased the policies that limited the outflow of funds raised through such issuances. Indeed, this has been a major reason supporting the expansion of the so-called. Panda bonds, which are available to foreign investors at a much lower cost of funding in renminbi.

HSBC reports that the bond issue targets global customers needing financing in Yuan, enhancing Hong Kong's international banking reputation. Yuan-denominated deposits in the city exceed 1 trillion for six consecutive months, signifying Hong Kong's rising importance in China's capital markets.

David Liao, HSBC’s co-CEO for Asia-American region spoke on the importance of enlarging the pool of offshore Yuan liquidity available for Hong Kong and how the developed financial infrastructure of the city is important in bringing about the globalization of the national currency.

This decision is in congruence with the attempts made by the Chinese Government to further enhance the international use of national currency.