With Bank of China International (BOC International) and Bank of China Hong Kong (BOC Hong Kong) as lead underwriters and bookkeepers, Volkswagen AG of Germany successfully issued an RMB 1.5 billion 5-year bond in Hong Kong recently. As the first RMB bond issued by a German company in Hong Kong and the first 5-year RMB bond issued by an overseas multinational company, it tops all the RMB bonds issued by multinational companies in terms of size of issuance.
The issuance has drawn close attention to the market and has received positive responses from funds, asset management companies and other institutional investors. The subscription ended in just 12 hours with the lowest point in the range of bond interest. It is reported that all the funds raised will be used by Volkswagen for its car manufacturing business in China.
According to Bian Fang, sales manager of financial products in charge of bond issuance business in BOC International, overseas multinational companies have, by the successful issuance of RMB bonds, further developed bond financing channels in RMB offshore market directly for their subsidiaries in China. It is likely to encourage more European and American multinational companies to choose RMB denominated financial products to broaden financing channels in the Asian market.
Taking full advantage of the multi-platform and integrated service within and outside China, Bank of China Group played a key role in the successful issuance of the bond through close cooperation among its investment banking department, branches, BOC International and BOC Hong Kong. Statistics show that Bank of China, through BOC International and BOC Hong Kong, grabbed 38.6% of RMB bond underwriting market share in Hong Kong in 2010, ranking the first and far ahead of its competitors.
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