DeHeng Advised Huatai Securities on Offshore RMB Bond Issuance

2022-09-20

In September 2022, Huatai Securities Co., Ltd. guaranteed the issuance of an offshore 3-year senior unsecured fixed-rate bond with the scale of RMB 5 billion and the coupon rate of 2.85% by its subsidiary Pioneer Reward Limited. The bond received a rating of Baa1 from Moody's. This was the largest issuance in the financial sector in recent years. 

Offshore RMB bonds are commonly known as “dim sum bonds” among market players. Compared with traditional domestic bonds, they are of special significance in expanding overseas financing channels, reducing financing costs, and in international communication and demonstration. Compared with USD bonds, they are denominated in RMB, raised and paid in RMB, which effectively protects them from the risk of USD-to-RMB exchange rate fluctuation and save the issuers' exchange spread and relevant fee cost.

In recent years, with the RMB going stronger as an international payment currency and gradually becoming a strong and hard currency, dim sum bonds have had a bigger issuance cost advantage. In particular, in the context of recent interest rate hike in the US dollar, the issuance scale of dim sum bonds has hit new highs, and the comprehensive financing cost of issuers has been significantly reduced. 

As the PRC legal counsel for Huatai Securities for this issuance, the DeHeng team was led by partner Hou Zhiwei, with primary support from partner Zhang Yan, as well as Hu Xueyuan, Yang Youqi and Liu Chen, and they once again advised the client on completing the offering.