Hong Kong’s offshore yuan bond market has seen another record-breaking deal – the largest single issuance by a Chinese state-owned enterprise – underscoring the growing appeal of the city’s dim sum bond market.
State Grid Corporation of China raised 14.9 billion yuan (US$2.2 billion) through offshore yuan-denominated bonds, known as dim sum bonds, according to a statement on Monday from Bank of China, which acted as a joint global coordinator for the deal.
The offering comprised 3.9 billion yuan of five-year bonds priced to yield 1.86 per cent, 7 billion yuan of 10-year notes at 2.18 per cent and 4 billion yuan of 20-year debt at 2.46 per cent.
Investor demand reached a record high, with orders totalling 193.8 billion yuan, more than 13 times the amount on offer, according to the bank.
The deal comes as Hong Kong’s dim sum bond market continues to expand. Nearly 500 billion yuan of offshore yuan bonds were sold in the first seven months of the year, according to Bank of China. The lender said it underwrote more than 100 billion yuan during the period.
Hong Kong Financial Secretary Paul Chan Mo-po, speaking at an August 3 event, said annual dim sum bond issuance had reached 1 trillion yuan in the past two years, with the outstanding bond size standing at around 1.6 trillion yuan.
State Grid’s deal adds to a string of heavily subscribed dim sum bond offerings this year, as lower yuan borrowing costs and growing investor demand fuel an expansion of the offshore market.