HSBC
The internationalization of the renminbi is a key component of China’s drive to enhance trade connections across the Belt and Road countries. Among international banks, HSBC has positioned itself as the market leader in this field, offering unrivalled renminbi settlement capabilities and trading.
The bank has also long since established itself as the go-to house for offshore renminbi bond placements and is now doing the same for onshore issuance in the currency by sovereign borrowers.
HSBC was one of four global banks mandated for the first-ever issue in the format, sold by South Korea in December 2015, and was joint lead arranger with Bank of China on Poland’s panda bond debut the following August.
This year, the bank acted as sole lead when Hungary followed its fellow central European sovereign into the market. The deal had been more than 18 months in the making and was part of a wider drive by the Hungarian government to position itself as a leading proponent of the Belt and Road Initiative in central and eastern Europe.
In early 2015, Hungary’s central bank launched an initiative to become the first offshore renminbi hub in the region. Its efforts were swiftly rewarded with access to the Chinese Interbank Bond Market, while in June of that year Hungary also became the first country in CEE to receive an RMB qualified foreign investor quota.
Plans for a sovereign panda bond were mooted in November 2015 and the borrower made its first foray into the renminbi market the following April with a three-year dim sum bond.
Access to the panda bond market proved more challenging but, with HSBC’s help, Hungarian policymakers finally achieved their ambition in July this year.
The Rmb1 billion ($153 million), three-year bond was well received by investors, Hungarian policymakers have announced plans for follow-up panda bonds and indicated that some of the proceeds of the inaugural issue will be used for BRI-related projects.