Dim Sum bonds issued in Singapore

Dim Sum bonds issued in Singapore

    POSTED: 27 May 2013 10:48 PM
  
Standard Chartered Bank and HSBC are issuing yuan-denominated (Dim Sum) bonds for the first time in Singapore.

SINGAPORE: Standard Chartered Bank and HSBC are issuing yuan-denominated (Dim Sum) bonds for the first time in Singapore.

The announcement came as the Singapore Exchange launched its own yuan-clearing system on Monday.

Both banks are also known to be among the most aggressive players in the offshore yuan market.

Standard Chartered's offshore renminbi-denominated Senior Unsecured Notes are the first RMB bond deposited with SGX.

The timing of the bonds issuance coincides with the start of offshore yuan-clearing services by the Industrial and Commercial Bank of China (ICBC) on Monday.

This could help free up trade in the currency and make Singapore an offshore hub for Dim Sum debt.

HSBC Singapore has issued a two-year yuan bond at a yield of about 2.25%. The notes will raise 500 million yuan.

Matthew Cannon, the head of Global Markets at HSBC in Singapore, said in a statement that the issuance shows HSBC's commitment to further develop the offshore RMB market.

He added: "The funds will be used to finance the bank's expansion of RMB-based lending assets.

"This issuance will help open the market to other issuers looking to fund themselves internationally in RMB, offer new investment opportunities to the substantial pool of wealth managed in Singapore and assist in funding the rapidly growing RMB denominated trade business in Asia."

Standard Chartered raised 1 billion yuan through its 3-year note issuance with a yield of 2.625% after generating over 3 billion yuan in orders from 75 investors across Asia.

With settlement of the bond set for 31 May, Standard Chartered said it would be the first offshore yuan bond that is listed, cleared and settled in Singapore.

Standard Chartered's CEO Ray Ferguson said in a statement that he sees this as another step in Singapore's development as an offshore RMB hub.

"Singapore already leads as a regional treasury centre; is a springboard to Southeast Asia along the key trade corridor with China and provides a hub for Asian wealth management and commodities trading. Singapore's contribution to the development of the RMB is further enhanced by this issuance," he added.

The sales will be cleared through SGX's Central Depository, which provides clearing and settlement services for securities in Singapore.

Will Hedden, IG Market's senior sales trader, said: "There's a lot of money here from China that would be looking for somewhere to go, in that respect in the fixed income space. And these banks are really there to capitalize on it.

"It's another kind of sign that perhaps people are moving away from dollars and yen and euros and other what we would consider major reserve currencies around the world and looking to get exposure into China."

Previously, most of the trading was handled through mainland China or Hong Kong-based banks.

Singapore is set to compete with other trading hubs such as Taipei, Tokyo, Kuala Lumpur, London and Luxembourg in a market estimated to worth up to 360 billion yuan, or US$59 billion.

SGX's depository service adds to the exchange's current offering of listing, quotation, trading, clearing and settlement of RMB-denominated securities and listing of offshore RMB bonds.

Magnus Bocker, CEO of SGX, said in a statement:  "Our enhanced RMB capabilities support customers interested in the internationalization of the RMB and the growth of the Chinese economy.

"It will also complement the Industrial and Commercial Bank of China's yuan-clearing service to participating banks, which starts today (Monday).

"As Singapore's role as an international offshore RMB centre becomes increasingly important, customers coming to SGX can be assured of our commitment to keep growing and enhancing our suite of RMB and China-related products and services."

HSBC and Standard Chartered said they would manage their own sales.

Last week, DBS Group said it wants to issue yuan-denominated bonds to be cleared out of Singapore too.

- CNA/al

- wong chee tat :)