Upon the announcement that Chinese authorities were opening up the mainland bond market we speculated that the position of offshore centres could be undermined. But centres such as Hong Kong will continue to expand RMB business. With the mainland bond market being dominated by central bank bills, government and financial institution bonds, perhaps the way forward for Hong Kong is international corporate issuance.
Standard Chartered this week announced the launch of a remnimbi- denominated corporate bond for McDonalds Corporation.
According to the press release it is the first RMB bond issued in Hong Kong for a foreign corporate: The RMB 200 million 3% notes due September 2013, was targeted at institutional investors. The bond offering generated good investor interest for its high credit quality, name recognition and rarity value.
It is the first ever RMB bond launched for a foreign multinational corporate in the Hong Kong debt capital market signifying the commencement of a new funding channel for international companies to raise working capital for their China operations. It is also a significant contribution to the development of the off-shore RMB debt capital market in Hong Kong
So at least Standard Chartered still appears bullish on the offshore China bond market. Benjamin Hung, CEO Standard Chartered Bank Hong Kong says: As a major player in Hong Kong, we are very delighted with the pace of the RMB market development process in Hong Kong. We will continue to expand our RMB product offering and enhance the product capabilities to better serve our clients needs and help enhance Hong Kongs growing status as a RMB offshore centre.