Crédit Agricole CIB SA

10/15/2021 | Press release | Distributed by Public on 10/15/2021 02:40

China completes the first municipality dim sum bond

As the first local Chinese government to sell debt overseas, People's Government of Shenzhen Municipality issued RMB 5 billion of dim sum bonds with Crédit Agricole CIB acting as joint Lead Underwriter and joint Bookrunner.

These debut dim sum issuances - bonds issued outside of China but denominated in Chinese renminbi - feature CNH conventional and green bonds, setting a benchmark for future Chinese local government overseas bond issuances.

The transaction is a successful example of combining two core elements - Shenzhen's quality credit rating and Hong Kong's international financial center. It will help give full play to the comprehensive advantages of Guangdong, Hong Kong and Macau, promoting the in-depth integration in the region and coordinated development of regional economy as well as the construction of a world-class Great Bay area.

This triple-tranche deal comprises RMB 1.1 billion of 2-year conventional bonds, as well as RMB 1.5 billion of 3-year and RMB 2.4 billion of 5-year green senior unsecured bonds. The purpose of the funds raised by the green bonds are clean transportation, water treatment and sponge city related projects, under the framework of green finance in Shenzhen. These issuances have obtained the third-party certification from Hong Kong Quality Assurance Agency (HKQAA).

"As one of the top CNH bond arrangers and a leader in Green Finance, Crédit Agricole CIB is privileged to take part in this landmark transaction and deliver another "world's first". This inaugural issuance drew strong attention from a diversified quality investor base, reflecting the wide appreciation for the Shenzhen story. Shenzhen's credit strength and the bond's scarcity value allowed Shenzhen to achieve attractive pricing as compared to its onshore levels, setting a fresh liquid benchmark for broader Chinese issuers in the dim sum bond market. Promoting the sustainable development and cross-border connectivity of the capital markets in Mainland, HK and beyond are at the core of our strategy, Crédit Agricole CIB will continue to leverage our global resources and play an active role in this journey."

Christophe Crétot, Head of Debt Origination & Advisory for Asia-Pacific

"People's Government of Shenzhen Municipality Offshore RMB 3-tranche bonds, as the first offshore RMB bond from Chinese local government, set the RMB pricing benchmark of offshore bond issuance for local government issuers from China. Based on the dynamic economic performance of the city named Shenzhen and its prominent role in the development of the Greater Bay Area, the market showed unlimited expectations for its bright prospect. The issuance of 3/5-year green bonds provides global investors with a lookout for observing the implementation of the '2030/2060 carbon peak and neutrality goals ' process of Chinese local governments, which would certainly enhance the transparency of Chinese local governments' actions on promoting green and low-carbon development. This inaugural green bond issuance will also play a role in accelerating the establishment of a "dual circulation" development pattern in which domestic economic cycle plays a key mission while international economic cycle remains its extension of a better world."

June Li, Head of Financial Institutions Group Coverage for China