The Bank of China has successfully launched its first offshore Renminbi (RMB) “Schengen bond”. The bond, which will be listed on the Euro MTF market of the Luxembourg Stock Exchange, has enabled Bank of China to be the first Chinese Mainland company to issue RMB bonds in the Eurozone.
This three-year bond, priced at 3.50%, amounts to a total of RMB 1.5 billion and is issued under the USD 10 billion MTN program of the Bank of China Group.
Robert Scharfe, CEO of the Luxembourg Stock Exchange, says: “The choice of Luxembourg as the listing place demonstrates the confidence of the Bank of China Group towards Europe and especially Luxembourg as a prime international financial center. This listing also strengthens our number one position in the world for the listing of offshore RMB denominated bonds outside Asia”.
This first offshore RMB bond was named “Schengen bond” using the name of a small village at the borders of Luxembourg, France and Germany, which stands for free movement within Schengen member countries. The pronunciation of “Schengen” in Chinese represents the meaning of “root here and develop here”.
Lihong Zhou, general manager of Bank of China, Luxembourg Branch, declared: “The successful launch of this Schengen bond is a further step towards the internationalization of the Renminbi and shows the commitment of Bank of China, China’s most international and diversified bank with a history of more than 100 years, to promote Luxembourg as a leading RMB Financial Center in Europe”.
Clearstream will facilitate the bond’s primary distribution (which is planned for May 15). The company was involved in the issuance process from the outset, working closely over the past years with Bank of China Luxembourg both in an advisory capacity based on Clearstream’s years of expertise in the area of new issuances, and now operationally for the bond’s primary distribution.
Clearstream will also remain involved in the secondary market as and when its customers invest in this bond and settle related trades via Clearstream. Finally, Clearstream will act as a custodian for this bond.
Marc Robert-Nicoud, member of the Executive Board, Clearstream, comments: “We embrace this as a major milestone in the issuance and development of the offshore Renminbi bond market in Europe and, as such, an important development in the internationalization of the Renminbi. The Chinese authorities’ agenda to further internationalize the Renminbi is an exciting development that we, as a core market infrastructure provider, have been supporting since the early days. We have a clear vision and strategy to help take this agenda forward – together with partners from across the market we look forward to contributing to the further development of a truly international offshore market for the Chinese currency.
Clearstream’s role in facilitating this specific Renminbi issuance exemplifies the positive collaboration we are able to develop with the Bank of China for the benefit of the market. This ties into our wider parent company Deutsche Börse Group’s recently announced Bank of China strategic partnership to further the Renminbi internationalization agenda, which forms part of the Group’s Asia strategy.”
Clearstream to Service BoC’s First RMB Bond Issuance in the Eurozone
The Bank of China has successfully launched its first offshore Renminbi (RMB) “Schengen bond”. The bond, which will be listed on the Euro MTF market of the Luxembourg Stock Exchange, has enabled Bank of China to be the first Chinese Mainland company to issue RMB bonds in the Eurozone.
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