HSBC Holds First Offshore ‘Dim Sum’ Bond Offering in London

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Apr. 20 – UK-based international banking and financial services company HSBC raised RMB2 billion (US$317 million) through three-year bonds at 3 percent on Wednesday, marking the first “dim sum” bond issuance outside of the greater China region and yet another step towards the internationalization of the RMB.

“The internationalization of the RMB is simply too important to ignore,” HSBC said in a press release on Wednesday. “Developing the offshore market is the route by which the RMB can evolve into a major global trading, financing and investment currency, and eventually a global reserve currency. HSBC expects the international RMB bond market to reach RMB1 trillion within three years as the demand for RMB-denominated assets continues to grow.”

Following China’s gradual relaxation of the once strictly-controlled foreign exchange regime, the UK Treasury has announced its plan to make London the leading international center for offshore RMB-denominated business.

In order to achieve the goal, City of London Corporation has formed a working group of five major banks this week – including Bank of China, Barclay, Deutsche Bank, HSBC and Standard Chartered – to provide leadership to the wider financial market and to advise the UK Treasury on how to maximize London’s capacity to trade offshore renminbi.

As a member of the working group and a leader in the “dim sum” (or RMB-denominated) bond market in Hong Kong, HSBC took the initiative to kick-start the market in London to fulfill investor demand. According to HSBC’s statement, the transaction saw very strong demand from both European and Asian investors with over half of the allocation going into European accounts.

London is competing with other international financial centers, such as Singapore, to establish itself as the premier offshore RMB trading center after Hong Kong following an agreement signed last year between China and the UK to jointly work on developing products and services denominated in RMB.

“We are proud to be able to issue this bond. It represents another step in London’s development as a premier international trading center for the reminbi and is an early sign of the huge potential that this market represents,” said Stuart Gulliver, HSBC’s chief executive.

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