May 27, 2013 / 11:46 AM / 5 years ago

UPDATE 1-HSBC, StanChart sell first yuan bonds in Singapore

By Kevin Lim and Umesh Desai

SINGAPORE, May 27 (Reuters) - British banks HSBC Holdings plc and Standard Chartered plc sold 1.5 billion yuan ($244.63 million) worth of notes in Singapore on Monday in the first dim sum bond issuances since yuan-clearing became available in the city-state.

China has been relaxing controls on the yuan, officially referred to as the renminbi or RMB outside the country, in order to gradually increase the use of its currency abroad.

Industrial and Commercial Bank of China has begun yuan-clearing in Singapore, the world’s fourth-largest forex trading centre and the main Asian base for oil and commodity traders.

Separately, Singapore Exchange on Monday launched depository services for yuan-denominated bonds, otherwise known as dim sum bonds, in a bid to support Singapore’s development as an offshore hub for issuers and investors of yuan-denominated bonds.

Yuan-clearing was already available in Hong Kong and Taiwan, and previously, much of the yuan activity in Singapore had to go through Hong Kong where yuan transactions could be cleared by Bank of China.

Matthew Cannon, head of global markets at HSBC Singapore, said proceeds from the yuan notes, which offer investors a yield of 2.25 percent, would be used to finance the bank’s expansion of yuan-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,” he said.

HSBC’s earlier pricing meant it beat rival StanChart to the punch.

StanChart raised 1 billion yuan through a Singapore-listed three-year offshore bond priced with a coupon of 2.625 percent. The bank received more than 3 billion yuan in orders from 75 investors across Asia, it said.

Besides HSBC and Stanchart, DBS Group is also planning to issue yuan-denominated bonds. Singapore’s largest lender announced its plan on Thursday but has yet to launch the debt securities.

China’s yuan hit a record high against the dollar on Monday for the seventh time this month after the central bank set the midpoint at its strongest level.

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