Central banks snap up dim sum issue from Canada's British Columbia

Reuters

HONG KONG, Nov 1 (Reuters) - The Canadian province ofBritish Columbia completed the sale of a 2.5 billion yuan($410.21 million) one-year dim sum bond on Friday, with centralbanks taking the lion's share of the offering.

The offshore yuan bond, expected to carry an Aaa rating, waspriced at 2.25 percent with order books exceeding 4 billion yuanfrom 42 investors, according to a term sheet seen by Reuters.

Among the buyers, central banks and foreign institutionsaccounted for 62 percent, followed by fund and asset managers at18 percent, corporates at 10 percent, banks 7 percent andprivate banks 3 percent.

Asian and U.S. investors took 59 percent and 40 percent ofthe bond, respectively, with the rest allocated to Europeaninvestors, the term sheet showed.

Foreign central banks have not been frequent investors indim sum bonds but have at times in the past bid for very highquality names with the purpose of diversifying their investmentportfolios.

For example, the 13 billion yuan jumbo dim sum bond issuedby China's Ministry of Finance in June had a tranche reservedfor central banks, which was well received and saw eight centralbanks participating, with names from Asia, South America andAfrica.

Earlier in March, when China Minmetals Corporation, astate-owned enterprise, sold a 2.5 billion yuan three-year bond,it also attracted foreign central banks to take 16 percent ofthe deal.

British Columbia's dim sum bond will be listed inLuxembourg. HSBC is the sole bookrunner of the transaction. Bankof China and Industrial and Commercial Bank of China areco-managers.

China is sparing no effort in promoting the wider use of itscurrency by launching a slew of pilot schemes, with the aim ofeventually elevating the status of the "redback" on par with theU.S. dollar.

Some foreign central banks, such as South Korea and Japan,have also started to put the yuan assets as part of theirforeign exchange reserves by investing in China's onshore bondmarket as well as dim sum bonds.

China has signed currency swap lines with 21 countries witha total value of more than 2 trillion yuan as part of efforts toencourage the use of the yuan in cross-border trade andinvestment.

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