BEIJING Infrastructure Investment Company (BII) on November 18 priced CNH 1 billion of senior unsecured bonds, representing the first offshore renminbi bonds listed on both the exchanges of Hong Kong and Macau. The transaction strengthens the financial ties within the Greater Bay Area (GBA), while underlying the strategic importance of the GBA to the opening of the China market.

The three-year Reg S deal was priced at 3.40%, or 35bp tighter than the initial price guidance of 3.750%, on the back of strong support from global investors. The final pricing, which was in line with the final guidance, was well inside the secondary trading levels of the bonds issued by comparable Chinese state-owned enterprises.

The offering, issued through Eastern Creation II Investment Holdings, effectively connects BII’s onshore and offshore renminbi financing channels and further optimizes its funding costs. With a well-established guaranteed medium-term note (MTN) programme, the company has achieved great flexibility and diversity in offshore asset and liability management.

Since its inaugural offshore bond issuance in 2014, BII has issued over US$4.7 billion equivalent offshore debt denominated in US dollar, euro, offshore renminbi and Hong Kong dollar.

David Yim, regional 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, says BII is the first Chinese investment grade corporate issuer to tap the dim sum bond market with a public issuance in 2019. “The transaction effectively sets the yield benchmark for Chinese issuers in the dim sum bond market in the future and promotes the internationalization of the renminbi,” he adds.

BII’s high quality credit profile and sovereign credit ratings attracted significant investor interest to the deal. Shortly after an hour of the announcement of the initial price guidance, the order book grew to over CNH 1 billion and peaked at CNH 2 billion upon the announcement of the final price guidance.

Proceeds from the bonds, drawn under the company’s US$6 billion MTN programme, will be used for debt refinancing and for general corporate purposes. The new trade further diversifies BII’s offshore renminbi investor base. Fund managers and asset managers received 53% of the allocation, while other financial institutions, insurance companies and private banks also manifested strong bids for the bonds.

Bank of China and Haitong International were the other joint global coordinators for the transaction, as well as joint bookrunners and lead managers, along with China Everbright Bank (Hong Kong), Founder Securities and OCBC Bank.

Standard Chartered also completed the update of BII’s guaranteed MTN programme as the left-lead joint arranger in 2019 and has led all the public offerings of the company’s offshore bonds since 2017.