Singapore Dim Sum Debt Planned as Yuan Clearing Spreads

HSBC Holdings Plc (HSBA) and DBS Group Holdings Ltd. are planning the first-ever sales of yuan-denominated bonds in Singapore as the city competes with Hong Kong and Taiwan as an offshore hub for the currency.

HSBC, Europe’s largest bank, will manage an offering by its Singapore branch of the securities, a person familiar with the matter said today, asking not to be identified because the details are private. DBS, Southeast Asia’s largest bank, plans to issue its first offshore yuan bond in Singapore “shortly,” according to an e-mailed statement yesterday.

Industrial & Commercial Bank of China Ltd. (601398)’s Singapore branch will start yuan clearing services from May 27, it said in a press release yesterday. Offshore debt sales in the currency of Asia’s biggest economy may reach as much as 360 billion yuan ($59 billion) this year, according to estimates from HSBC. Taiwan became the second location for such note sales this year when Chinatrust Commercial Bank raised 1 billion yuan in February, data compiled by Bloomberg show.

“It’s a big leap for Singapore in becoming an offshore yuan hub,” said Ho Man Chun, economist and strategist at Bank of Communications Co.’s Hong Kong branch. “There’ll be pretty good demand for yuan services,” he said by telephone today, adding that Hong Kong will face “strong competition” from the city.

HSBC’s notes will be cleared through Central Depository Pte, a unit of Singapore Exchange Ltd. (SGX), the person said. ICBC was appointed as Singapore’s renminbi clearing bank by the People’s Bank of China on Feb. 8, according to a statement on the Singapore monetary authority’s website.

The Hong Kong regulator’s CMU unit and Bank of China Hong Kong Ltd. provide that infrastructure in Hong Kong, while Taiwan Depository & Clearing Corp. and Bank of China’s Taipei branch operate in Taiwan.

To contact the reporters on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net; Fion Li in Hong Kong at fli59@bloomberg.net

To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net

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