Shanghai Pudong Development Bank says to issue up to 1 bln yuan dim sum bond

HONG KONG, April 12 Fri Apr 12, 2013 2:04am EDT

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HONG KONG, April 12 (Reuters) - Shanghai Pudong Development Bank said it planned to issue up to 1 billion yuan ($161.4 million) worth of dim sum bond in Hong Kong, in a bid to broaden its fundraising channels and foster the development of its offshore yuan business.

So far, most of the banks that have issued dim sum bonds are Chinese policy banks and big commercial banks, such as China Development Bank, Industrial and Commercial Bank of China and Bank of China .

The Pudong Development Bank's issuance plan would expire by the end of 2014, it said in a statement to the Shanghai Stock Exchange on Friday. No further details were available.

The dim sum bond issuance will help Pudong Development Bank develop its offshore yuan business and also answers the government's call to promote the process of internationalising the yuan, an official at the bank told Reuters.

The National Development and Reform Commission (NDRC) approved quotas totalling 25 billion yuan to 10 Chinese banks last year to sell yuan bonds in the offshore market and all the quotas have been used up.

Market participants are expecting a new batch of quotas to be granted by the NDRC in the coming weeks to allow mainland banks and corporates to sell dim sum bonds.

Funding cost in the offshore market remains cheaper than onshore market for Chinese banks. It is about 100-120 basis points (bps) and 60-80 bps cheaper to raise funds in dim sum market for Chinese commercial and policy banks, respectively, HSBC estimated.

Hong Kong's offshore yuan bond market has developed rapidly since the first dim sum bond was issued in July 2007. Total issuance volume amounted to 57.8 billion yuan year-to-date, according to Thomson Reuters statistics. ($1 = 6.1963 Chinese yuan) (Reporting by Michelle Chen and David Lin; Editing by Shri Navaratnam)

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