China International Capital Corp arranged the 10 year deal, which priced at par with a 4.2% coupon.
It was the first renminbi bond from a foreign issuer, or panda bond, since the International Finance Corp (IFC) sold a Rmb870m deal in November 2006 and will give encouragement to bankers lobbying the government for approval to bring more foreign issuers into China.
Bankers and lawyers in the country are hopeful that China will let new issuers come to a market that has so far since only two issues each from ABD and IFC. Foreign companies are expected to be given the green light to list on China’s stock markets next year, and the expansion of the bond market is seen as the next logical step.
“The transaction will be an excellent benchmark for other international issuers to come,” said Wei Ding, head of investment banking at CICC.
Panda bond issuers cannot swap their renminbi into other currencies because of China’s strict capital controls, so they need to spend the money inside the country. The ADB will provide funding to private sector companies that work on clean energy and energy efficient projects.
The borrower met investors in Beijing and Shanghai before it priced the deal on Friday (December 4). Domestic banks bought half of the deal, with insurance companies taking 35% and the local branches of foreign banks buying the remaining 15%.