China Minmetals sells 2.5 bln yuan 3-year dim sum bond at 3.65 percent

HONG KONG, March 22 Thu Mar 21, 2013 9:46pm EDT

HONG KONG, March 22 (Reuters) - China Minmetals Corporation, a state-owned enterprise, completed its sale of a 2.5 billion yuan ($402.3 million) three-year dim sum bond at 3.65 percent, according to a term sheet seen by Reuters.

It was the fourth company to tap the 25 billion yuan quota granted by China's National Development and Reform Commission (NDRC) to five mainland companies last year to issue yuan bonds offshore.

"Demand was quite strong and the orders have already surpassed 2 billion yuan within an hour after the books opened," said a source close to the deal, adding the price guidance was later tightened to 3.65-3.75 percent from the initial 3.85 percent area.

Baosteel Group was the first to use up its 6.5 billion yuan quota approved by the NDRC and China Guangdong Nuclear Power also sold a total of 3 billion yuan in dim sum bonds in October 2012 and January.

The latest comparable issue to China Minmetals' bond is Huaneng Power International's three-year dim sum bond sold in January with a coupon of 3.85 percent. The bond was quoted at 3.54/3.44 percent in the secondary market on Thursday.

Neither the issuer nor the senior unsecured offshore yuan bond is rated. The proceeds will be used for general corporate use.

HSBC, DBS Bank, Industrial and Commercial Bank of China (Asia), Agricultural Bank of China International and Standard Chartered Bank are the joint lead managers and bookrunners.

Investors are flocking to the offshore yuan bond market to seek higher returns as the red-hot dollar bond market has began to cool down and digest the heavy issuance earlier this year.

Last week, three high-yield dim sum bonds sold by Chinese firms Gemdale (Asia), 21Vianet and Russian Standard Finance drew in a total of over 14 billion yuan of orders, well exceeding the combined bond sizes.

Analysts say lack of supply and relatively higher yields in the dim sum bond market will continue to attract more investors, especially as confidence in China's economy has improved, supporting the yuan currency.

Total issuance volume amounted to 46.5 billion yuan year to date, according to Thomson Reuters statistics. ($1 = 6.2143 Chinese yuan) (Reporting by Michelle Chen; Editing by Kim Coghill)