HSBC Plans Sale of Dim Sum Yuan Bonds Listed in London

HSBC Holdings Plc, Europe’s biggest bank by market value, is planning to sell yuan-denominated bonds listed in London, according to an e-mailed media release from the bank today.

The sale will be the first time a European bank has issued so-called Dim Sum bonds listed in the city, according to data compiled by Bloomberg. It is the first yuan note to be issued outside of China, including Hong Kong, according to the release.

There are currently more than 109 billion yuan ($17.3 billion) of customer and interbank deposits in the Chinese currency in London, according to a policy paper prepared by research firm Bourse Consult and released yesterday. China, which is expanding the use of its currency overseas, designated Hong Kong as an offshore center for trading after allowing trade settlements using the currency, also known as the renminbi, in 2009.

“London is the world’s most pre-eminent financial center. We are not prepared to let anyone steal a march on us when it comes to new products and new markets,” U.K. Chancellor of the Exchequer George Osborne said in London today. “In the coming decades it is China that will act as a powerhouse of the world economy,” he said, adding that he hopes Chinese companies can also sell yuan bonds in London.

HSBC is marketing the three-year notes to yield about 3 percent to 3.25 percent, a person familiar with the matter said today, asking not to be identified because the details are private. The London-based bank is the top underwriter of Dim Sum bonds in Hong Kong this year, according to data compiled by Bloomberg.

“This represents another step in London’s development as a premier international trading center for the renminbi and is an early sign of the huge potential this market represents,” Stuart Gulliver, chief executive officer of HSBC, said in the e-mailed release.

The Hong Kong Monetary Authority announced in January that it plans to lengthen trading of the yuan by five hours by June, allowing London-based institutions the opportunity to expand their participation in the market outside China.

“European investors have become increasingly active in the Dim Sum market,” Steve Wang, the head of fixed-income research in Hong Kong at BOCI Securities, a unit of Bank of China Ltd., said. “The listing gives some symbolic sign London has the capacity and the desire to serve the renminbi business.”

— With assistance by Henry Sanderson

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