May 27, 2019 (China Knowledge) - China’s rural policy bank, the Agricultural Development Bank of China (ADBC) has become the first non-government issuer to sell bonds to retail investors on the Hong Kong Stock Exchange.
Last week, individual investors were allocated a RMB 200 million share of the ADBC’s RMB 2 billion one-year RMB-denominated bond which had a coupon of 3.08% made through the HKEx’s central clearing and settlement system.
The latest offer was part of the ADBC’s plan to raise RMB 3 billion through the sale of dim sum bonds which included a RMB 1 billion three-year bond which was sold to institutional investors at a coupon of 3.23%. These funds will be used by the bank to expand lending as well as for working capital and general corporate purposes.
The bank’s bond issuance was the first to be open to both retail investors via the HKEx and to institutional investors in the over-the-counter (OTC) market providing retail investors with a greater variety of investment products while also allowing the ADBC to diversify its financing channels.
According to the HKEx, only sovereign issuers had managed to sell securities through the HKEx in the past due to its strict disclosure and approval requirements.
The ADBC as a quasi-sovereign entity was allowed to follow simplified procedures for its recent issuance and that the HKEx hopes that more quasi-sovereign entities will sell bonds through the HKEx or other linking mechanisms such as the stock connect and bond connect schemes in the future.
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