The Asian Infrastructure Investment Bank (AIIB) has completed a public Hong Kong dollar-denominated bond offering, raising HK$4 billion (US$549 million), the multilateral development bank said on Thursday.
The three-year senior unsecured fixed-rate sustainable-development bonds pay an annual coupon of 3.847 per cent, and will settle locally in Hong Kong’s Central Moneymarkets Unit (CMU), which tracks and manages Hong Kong-dollar debt securities and other financial products.
The bonds attracted investors domestically and across Asia-Pacific, with the final order book reaching HK$9 billion and more than 25 orders, according to the bank’s official statement. AIIB said the issuance highlighted the opening of the Hong Kong dollar market and offered investors an opportunity to diversify their assets while supporting the bank’s public market expansion.
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The bonds are the first Hong Kong dollar public bonds priced at a spread to the Hong Kong interbank offered rate – the interest rate at which banks in the city lend to one another – mid swap. This type of large, liquid benchmark bond provided pricing transparency and interest-rate risk hedging, and also adhered to international norms, said Domenico Nardelli, AIIB treasurer.
“The Hong Kong market is a stable market,” Nardelli said. “We have proven now it also [has] a deep pool of financial liquidity. It’s definitely something interesting for us and our class of issuers to explore further.”
The offering from AIIB, which has a top rating from all three major credit rating agencies, received orders of more than HK$10 billion at the peak, drawing diverse investors including central banks, bank treasuries, asset managers and local companies, according to Standard Chartered, joint lead manager on the deal.
“The depth and sophistication of the Hong Kong dollar market make it an attractive environment for issuers like AIIB,” said Darren Stipe, the bank’s head of funding.
By undertaking a public transaction settled in the CMU, the bank could reach a broader investor base while improving Hong Kong dollar liquidity, Stipe said, adding that the transaction drew 15 new investors.
“As more local and international issuers look for alternative funding opportunities in the Hong Kong dollar bond markets, we expect to see [that] market [grow further] with a more diverse mix of issuers and investors, strengthening Hong Kong’s status as an international financial centre,” said Jerry Zhang, global co-head of financial institutions coverage at Standard Chartered.
