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The government of Guangdong province and rail operator MTR Corp have completed yuan-denominated bond offerings in Hong Kong, adding to a record wave of such issuances in the city this year.
The 5 billion yuan (US$703 million) offering by the southern Chinese province, comprising 2 billion yuan in two-year bonds, 1.5 billion yuan in three-year bonds and 1.5 billion yuan in five-year bonds, attracted 57.18 billion yuan in bids from investors, making it 11.4 times oversubscribed, Bank of China (Hong Kong) said in a press release on Wednesday. BOCHK is a joint lead-manager and bookrunner, the clearing bank and the green structure consultant for the sale.
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The dim sum bond market has been booming this year. Issuance exceeded 465 billion yuan in the first half, a jump of 28 per cent despite a higher base of comparison in the year-earlier period, according to the Hong Kong Monetary Authority.
The latest offering follows two other issuances by Chinese authorities last month. The Shenzhen municipal government's fourth and largest dim sum bond offering raised 7 billion yuan with an oversubscription rate of 6.9 times, while the Ministry of Finance's 9 billion yuan offering was overbought by 2.4 times.
More issuances would expand dim sum bond varieties and improve the yield curve with a more comprehensive pricing reference, regulators and market participants said.
"We welcome the issuance of RMB [renminbi] bonds by the People's Government of Guangdong Province in Hong Kong for the first time," Hong Kong's Financial Secretary Paul Chan Mo-po said last week. "This further enriches the RMB financial products suite in the Hong Kong market and fully leverages Hong Kong's advantage as a bridge connecting international capital to the financial needs of high-quality projects on the mainland."
The proceeds from Guangdong's two-year bonds will be used for projects in Nansha, Guangzhou, while those from the three-year bonds will be used for major infrastructure projects in the Pearl River Delta region, which covers nine prefectures of the province of Guangdong, as well as Hong Kong and Macau. The five-year bonds are for green projects.
"As a major economic province in China, Guangdong province has a strong economic foundation and active market atmosphere," said Wang Hua-bin, a deputy chief executive at BOCHK.