Finance ministry issues 5b yuan of treasury bonds in HK, 4.36X oversubscribed
Published: Aug 10, 2022 10:39 PM
Renminbi Photo: VCG

Renminbi Photo: VCG

The Ministry of Finance (MOF) on Wednesday issued 5 billion yuan ($742.28 million) of treasury bonds in the Hong Kong Special Administrative Region (HKSAR), with institutional investors vying for the yuan-denominated instruments.

The issue was 4.36 times oversubscribed by institutional investors, and the issue rate was 10-15 basis points lower than bond yields in Hong Kong's offshore secondary market, the ministry said in a statement on its website. 

More specifically, the 4 billion yuan of two-year bonds was 4.12 times oversubscribed, with an issue price of 100.35 yuan, or a rate of 2.245 percent. In the case of the 10-year bond sale worth 1 billion yuan, the issue was 5.33 times oversubscribed at a rate of 2.82 percent.

The Wednesday issue was the second batch of the MOF's planned 23 billion yuan of Treasury bond sales in the HKSAR for this year.

The first issue of the year was done in mid-June. The 7.5 billion yuan bond sale, composed of three equal tranches of two-, three- and five-year treasury bonds, was at least four times oversubscribed by institutional investors.

This year's quota for yuan-denominated treasury bond issuance in the HKSAR was set at 23 billion yuan in total, the MOF revealed in June. In addition to the issues in June and August, a third batch totaling 5.5 billion yuan is scheduled for October.

Hong Kong is the world's largest offshore yuan hub, settling roughly 75 percent of global yuan payments outside of the Chinese mainland.

The clout of Hong Kong in handling offshore yuan business has been strongly backed by the central government. Typifying such efforts, the MOF kicked off the sale of yuan-denominated treasury bonds in Hong Kong in 2009. 

In a blog post in July, Eddie Yue, chief executive of the Hong Kong Monetary Authority (HKMA), wrote that the city has been a trusted testing ground for many of the country's financial opening-up initiatives since the availability of personal yuan banking business in 2004.

Yue cited the first dim sum bond sale in 2007 and the first yuan-based cross-border trade settlement in 2009.

The HKMA chief vowed to continue to work closely with mainland authorities and market participants for there to be more policy headroom and an enabling environment that will boost the HKSAR's offshore yuan hub, as an important underpinning of the city's status as an international financial center.

Global Times