China Construction Bank lists renminbi bonds in Luxembourg

China Construction Bank listed four renminbi bonds on the Luxembourg Stock Exchange on Tuesday, following a growing trend of renminbi bonds listings on the exchange.

The bonds are tranches of the bank's $5 billion medium term note program, and are now trading on the exchange's Euro MTF market. All four tranches are denominated in renminbi with a total issue amount of 3.3 billion yuan ($540 million).

The amounts, coupons and maturities for the four bonds are 700 million yuan at 3.3 percent maturing in 2016, 1 billion yuan at 3.75 percent maturing in 2019, 1 billion yuan at 3.95 percent maturing in 2021, and 600 million yuan at 4.08 percent maturing in 2024.

The issue was listed simultaneously in Luxembourg, Hong Kong and on the GreTai Securities Market in Taiwan, with whom Luxembourg Stock Exchange signed a memorandum of understanding in September this year.

The joint lead managers for the issue were CCB International, HSBC and KGI Securities.

In 2013, China Construction Bank opened its European headquarters in Luxembourg, becoming the third Chinese bank to establish a presence in Luxembourg following the footsteps of Bank of China and Industrial and Commercial Bank of China.

Luxembourg has the largest pool of renminbi in the Eurozone with 79.4 billion yuan in deposits and 73.0 billion yuan in loans until the end of the first quarter of 2014. It is also the largest renminbi securities settlement centre and the leading listing place for renminbi denominated bonds in Europe.

The funds investing in renminbi denominated assets domiciled in Luxembourg have managed assets over 261.8 billion yuan. Luxembourg is home to Clearstream, the principal European supplier of post-trading services, through which renminbi bonds with a volume of currently 408 billion yuan in the first quarter of 2014 are cleared and financed.

Already Luxembourg Stock Exchange is home to many renminbi bonds. A high profile renminbi bonds issue this year was the launch of Bank of China's ‘Schengen bond' in May. Listed on the Euro MTF market of Luxembourg Stock Exchange, it has enabled Bank of China to be the first Chinese mainland company to issue renminbi bonds in the Eurozone.

Robert Scharfe, CEO of the Luxembourg Stock Exchange, told China Daily in a previous interview that the popularity of renminbi bonds listing on the Luxembourg Stock Exchange is due to the exchange's international perspective, especially after listing the first Eurobond in 1963.

"We were interested in international business early on, and have become good at listing bonds. We have developed additional after-sale services for issuers, so it's not just a one-off service," Scharfe said.

Scharfe said listing a large number of renminbi bonds on the Luxembourg Stock Exchange brings numerous benefits to the local economy.

In addition to the listing fees received by the stock exchange, Luxembourg's local law firms and banks also gain from such moves as they can provide services to the bond issuers. Their proximity to and understanding of the Luxembourg investment environment is of great help to the bond issuers, Scharfe said.