ICBC dim sum sub debt leads the waves of offshore renminbi activities
The launch of several offshore renminbi products and services underlines sustained demand for access to the currency and related businesses despite global market fluctuations and domestic concerns in China. November 02, 2011 | Wong Wei HanThe ICBC (Asia) announced the launch of its lower tier-2 bonds in Hong Kong on October 27th, becoming the first bank to issue subordinated renminbi (Rmb) debt in the offshore market. The 1.5 billion Rmb ($235 million) bond will be offered with a 10.5-year maturity and priced at a 6% yield, which is at the lower end of the 6% to 6.125% band. The issuance came as a landmark event on the offshore Rmb markets – not only is the bond the first-ever subordinated dim sum debt, it is also the first in Asia to be compliant with Basel III requirements for inclusion in the issuer’s tier-2 capital. This is highlighted by the bond’s non-viability loss-absorption clause, under which the value of the bond will be written down to zero if its issuer is declared non-viable. The launch of ICBC’s subordinated dim sum bonds is but one of the few recent high-profile activities that mark the consistently strong demand and confidence for offshore Rmb businesses. Even as global markets fluctuate along with developments in the European sovereign debt crisis over the past month, offshore Rmb markets have continued to grow with the arrival of several new products and services. Very recently reports have surfaced indicating the imminent launch of Rmb services in Europe by Japan’s Mitsubishi UFJ. This does not come as a surprise – the Japanese financial group has shown keen ambitions in tapping surging global demand for Rmb services when it rolled out offshore Rmb capabilities in the US in mid-October through its wholly owned subsidiary Union Bank, eyeing US-based companies that look to avoid currency risks in international trade. At Taiwan, domestic and overseas financial institutions have also been picking up their pace in developing offshore Rmb capabilities. This is made possible by a more liberal stance gradually adopted by the Financial Supervisory Commission (FSC) across recent months after FSC’s announcem... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: China, Hong Kong, Rmb, Taiwan, Trade Finance, Transaction BankingChina,HK,Rmb,Taiwan,Trade Finance,Transaction Banking, China,Hong Kong,Rmb,Taiwan,Trade Finance,Transaction Banking, Keywords:Industrial And Commercial Bank Of China, Bank Of East Asia, Mitsubishi UFJ, Taiwan FSC Industrial and Commercial Bank of China, Bank of East Asia, Mitsubishi UFJ, Taiwan FSC
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