HONG KONG, Nov 1 (Reuters) - The Canadian province of British Columbia completed the sale of a 2.5 billion yuan ($410.21 million) one-year dim sum bond on Friday, with central banks taking the lion’s share of the offering.
The offshore yuan bond, expected to carry an Aaa rating, was priced at 2.25 percent with order books exceeding 4 billion yuan from 42 investors, according to a term sheet seen by Reuters.
Among the buyers, central banks and foreign institutions accounted for 62 percent, followed by fund and asset managers at 18 percent, corporates at 10 percent, banks 7 percent and private banks 3 percent.
Asian and U.S. investors took 59 percent and 40 percent of the bond, respectively, with the rest allocated to European investors, the term sheet showed.
Foreign central banks have not been frequent investors in dim sum bonds but have at times in the past bid for very high quality names with the purpose of diversifying their investment portfolios.
For example, the 13 billion yuan jumbo dim sum bond issued by China’s Ministry of Finance in June had a tranche reserved for central banks, which was well received and saw eight central banks participating, with names from Asia, South America and Africa.
Earlier in March, when China Minmetals Corporation, a state-owned enterprise, sold a 2.5 billion yuan three-year bond, it also attracted foreign central banks to take 16 percent of the deal.
British Columbia’s dim sum bond will be listed in Luxembourg. HSBC is the sole bookrunner of the transaction. Bank of China and Industrial and Commercial Bank of China are co-managers.
China is sparing no effort in promoting the wider use of its currency by launching a slew of pilot schemes, with the aim of eventually elevating the status of the “redback” on par with the U.S. dollar.
Some foreign central banks, such as South Korea and Japan, have also started to put the yuan assets as part of their foreign exchange reserves by investing in China’s onshore bond market as well as dim sum bonds.
China has signed currency swap lines with 21 countries with a total value of more than 2 trillion yuan as part of efforts to encourage the use of the yuan in cross-border trade and investment.