The Shenzhen municipal government has successfully priced dim sum bonds amounting to 5 billion yuan (US$775.6 million), the first time a Chinese local government has tapped the offshore renminbi bond market. The bonds will be listed on the Hong Kong Stock Exchange.

Standard Chartered Bank acted as joint lead manager and joint bookrunner, as well as billing and delivery bank.

The issuances include 1.1 billion yuan two-year bonds with a coupon of 2.6%, 1.5 billion yuan three-year bonds with a coupon of 2.7%, and 2.4 billion yuan five-year bonds with a coupon of 2.9%.

Net proceeds will be used for general government purposes as well as for water treatment, environmental resilience, and clean transportation projects.

The deal has attracted strong response from investors, with a total of 89 accounts from eight countries and regions, including Europe and the Middle East.

The total order book reached 19.03 billion yuan at the peak and 17.4 billion yuan after final pricing guidance, representing an oversubscription of 3.48 times.

David Yim, head of capital markets, Greater China & North Asia, at Standard Chartered Bank, says: “Through this local government dim sum bond, Shenzhen government has taken a lead in exploring the breadth and depth of offshore capital markets and further diversifying the offshore RMB bond products. The three-year and five-year tranches are green bonds, showing Shenzhen government’s determination in promoting green and low-carbon development.

“The investor base to this transaction is highly diversified, including quite a few real money accounts as well as holding-to-maturity investors, demonstrating international investors’ confidence in China and Shenzhen’s strong economic development and promising outlook. This transaction has also furthered the Shenzhen-Hong Kong cooperation as well as RMB internationalization.”