Lately, Bank of China Hong Kong Branch successfully issued US$1.25 billion premium bonds in overseas markets, which marked the biggest single bond issue by a Chinese-funded financial institution in Hong Kong.
The bonds consist of two portions: US$750 million for a term of 3 years (with a coupon rate of 2.125%) and US$500 million for a term of 5 years (with a coupon rate of 3.125%). Bank of China and Citibank are the joint global coordinators, joint lead banks and book runners for this bond issue, which targets the institutional investors in Asia, Europe, Middle East, Africa and other regions. This bond issue was fervently received in the markets, with the 3-year portion 2 times oversubscribed, and the 5-year portion 3 times oversubscribed.
The bonds will be listed and traded on the Hong Kong Stock Exchange from January 24th, 2014. It was the first US dollar-denominated bond issue under BOC's US$10 billion Medium Term Note(MTN) program. Since establishing the MTN program in December 2013, BOC has issued RMB2 billion "Formosa Bond" in Taiwan and RMB2.5 billion offshore RMB bonds in London.
As the most internationalized Chinese bank, BOC, through this US dollar-denominated bond issue in Hong Kong, has strengthened its relations with international investors, established the dollar bond yield curve of its own, and promoted the development of Hong Kong and the entire offshore US dollar bond markets. The successful issue of such bonds held great significance for BOC in broadening financing channels, diversifying product lines, optimizing its financing structure, and developing overseas business.
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