Hong Kong’s public transport operator and property developer MTR Corporation (MTRC) on September 10 priced its inaugural public offshore renminbi green bonds comprising of two tranches totalling 4.5 billion yuan (US$633 million).

The first tranche of the Reg S deal was for 10 years amounting to 3 billion yuan. It was priced at par with a similar coupon and re-offer yield of 2.75%, which were in line with the final price guidance and 35bp tighter than the initial price range of 3.10% area. The second tranche was for 30 years amounting to 1.5 billion yuan, which was also priced at par with a similar coupon and re-offer yield of 3.05%. These were likewise in line with the final price guidance and 35bp back of the initial price range of 3.40% area.

The deal was very well received by high-quality and diverse investors from Asia and EMEA, including sovereign wealth funds, asset managers, banks, insurance companies and private banks. The significant final order book size of nearly 20 billion yuan and the very high number of investors, both exceptional in long-dated CNH trades, are testaments to MTRC’s outstanding credit quality.

The 10-year bond garnered a total demand of 11.2 billion yuan from 95 accounts with 89% of the paper distributed in Asia and 11% in EMEA. By type of investors, asset and fund managers, and insurance companies accounted for 39%, banks 27%, official institutions and sovereign wealth funds 23%, and private banks and securities companies 11%.

The total demand for the 30-year offering amounted to 8.7 billion yuan from 85 accounts and 100% of the bond was sold in Asia. Asset and fund managers, and insurance companies also drove this trade as they took 62% of the paper, while official institutions and sovereign wealth funds bought 20%, private banks and securities companies 15%, and banks 3%.

“By getting such a strong reception in one of the busiest weeks of the year in the capital markets, MTRC has proved its strong capability in tapping different funding channels at very attractive costs while expanding its investor base,” says David Yim, head of capital markets for Greater China and North Asia at Standard Chartered, which acted as a joint global coordinator, bookrunner and lead manager for the transaction.

“The overwhelming response on these longer tenors also demonstrates the growth potential of the CNH public market. As of end-August this year, the amount of CNH bond issuance has grown by almost 10% year-on-year. We believe MTRC’s success will attract more issuers, both local and international, to look into the dim sum bond market.”

Bank of China (Hong Kong), Crédit Agricole CIB, HSBC and Mizuho Securities Asia were the other joint global coordinators, bookrunners and lead managers for the deal, while ANZ, Barclays, BNP Paribas, DBS, Deutsche Bank, ICBC (Asia), J.P. Morgan, MUFG Securities, OCBC Bank, SMBC Nikko Securities (Hong Kong) and Société Générale acted as the bookrunners and lead managers.