Euroclear’s Yulan bond structure sees first investment bank issuance in China

Guotai Junan Securities issuance four times oversubscribed on structure launched in December 2020 by Euroclear.

By Richard Schwartz

Euroclear Bank, the Brussels based International Central Securities Depository (ICSD), has announced that Guotai Junan Securities is utilising its Yulan bond structure, through which Chinese issuers are able to gain direct exposure to a wider foreign investor base.

Under the Euroclear structure launched in December 2020, Yulan Bonds are issued through Shanghai Clearing House with international investors benefiting from real time multi-currency DVP settlement with any counterparty within Euroclear Bank’s network. The Bank of China was the first issuer under the scheme.

The Guotai Junan Securities issuance was priced at $300 million with a tenor of three years and was four times oversubscribed. The successful issuance was described by NIE Xiaogang, CFO and deputy general manager, Guotai Junan Securities as “further strengthening the financial innovation function of Shanghai city as an International Financial Centre, symbolising the entry into a new stage by Chinese institutions for overseas bond issuance activities.”

Wang Hongbo, deputy general manager, Shanghai Clearing House congratulated Guotai Junan Securities as being the Chinese securities firm to issue a Yulan bond in the global markets. adding that, “Together with Euroclear Bank, Shanghai Clearing House will continue to optimise the Yulan bond structure in line with market demand under the guidance of regulatory authorities, which will further contribute to the blossoming of the Yulan bond.”

Stephan Pouyat, global head of capital markets and funds services at Euroclear said the issuance was meaningful, “given that this is the first Chinese investment bank to use our Yulan structure. We look forward to 2022 where we see a healthy pipeline of issuances from all sectors continuing the momentum of this new and innovative structure.”