ePrime Northbound Subscription Service Facilitates the Cross-border Subscription of CDB’s 7-day Reference Rate Reset DR Floating Rate Bonds
26 November 2024
ePrime Northbound Subscription Service facilitated offshore investors’ cross-border subscription of China Development Bank’s (“CDB”) 7-day Reference Rate Reset DR Floating Rate Bonds on 21 November 2024. Under the guidance of the People's Bank of China (“PBOC”), CDB successfully issued the first medium-to-long-term floating rate bonds based on the reference rate of DR007, with an issuance amount of RMB 3 billion each on the 10 and 5-year bonds. The seamless connectivity between ePrime and iDeal (the Bond Issuance, Underwriting and Distribution system of CFETS) allowed Bank of Communications (Hong Kong) to successfully complete their online subscription, encompassing order placement and allocation.
This issuance of the two floating rate bonds demonstrates the implementation of PBOC’s drive to improve the monetary policy framework and enhance the market-oriented interest rate adjustment mechanism. This issuance marks the first instance where the DR007 reference rate has been used for 10 and 5-year medium-to-long-term bonds. The 10-year DR floating rate bonds were issued with a spread of 35 basis points with an initial reset rate of 2.08%, where the 5-year DR floating rate bonds had a spread of 0 basis points and an initial reset rate of 1.73%. The issuance attracted active participation from various investors, including banks, brokerages, funds, and insurance, and was oversubscribed by 5.13 and 6.44 times respectively.
Mr. Gu Zhonghui, Deputy General Manager of the Funding Department of CDB, commented, "CDB promotes the advancements in market-driven interest rate reforms, and support the cultivation of the floating rate bond market. We aim to explore policy transmission mechanisms across the interest rate curve through market price discovery, and to continuously promote the development of the bond market.”
Ms. Patty Li, Executive Director of FICC Department of China International Capital Corporation Limited (“CICC”), the onshore underwriter who facilitated the cross-border subscription via iDeal, commented, “CICC is honored to maintain a close relationship with BCCL and is proud to have successfully assisted offshore investors in participating in the primary auction of CDB's floating-rate bonds via ePrime Northbound Subscription Service. CICC is committed to promoting cross-border trading activities between China and international bond markets. CICC will continue to collaborate closely with BCCL, to effectively guide foreign investors to participate in China's onshore primary market.”
Mr. Tony Wang, General Manager of BCCL, commented, "The issuance highlights CDB's ongoing commitment to innovation and is an important step in promoting the establishment of interest rate benchmarks and the enhancement of monetary policy transmission mechanisms, expanding the depth and breadth of the China bond market. BCCL is honored to support foreign investors in subscribing to this innovative floating rate bonds and will continue to work closely with CDB in promoting the development of the China bond market."
In collaboration with CFETS and launched in October 2020, ePrime is an electronic solution for the primary bond market that spans across issuers, underwriters and investors specialized in the China cross-border workflow. It has two components to cater for issuance and subscription applications: ePrime Issuance Service and ePrime Northbound Subscription Service.
ePrime Northbound Subscription Service allows international investors to participate in the Northbound subscription of CIBM new issuances with onshore underwriters through the connectivity between ePrime and iDeal. It supports the cross-border subscription of various types of bonds, such as CGBs, PFBs, green financial bonds, MTNs, CP/SCPs etc, with 66 international investors onboarded.
This issuance of the two floating rate bonds demonstrates the implementation of PBOC’s drive to improve the monetary policy framework and enhance the market-oriented interest rate adjustment mechanism. This issuance marks the first instance where the DR007 reference rate has been used for 10 and 5-year medium-to-long-term bonds. The 10-year DR floating rate bonds were issued with a spread of 35 basis points with an initial reset rate of 2.08%, where the 5-year DR floating rate bonds had a spread of 0 basis points and an initial reset rate of 1.73%. The issuance attracted active participation from various investors, including banks, brokerages, funds, and insurance, and was oversubscribed by 5.13 and 6.44 times respectively.
Mr. Gu Zhonghui, Deputy General Manager of the Funding Department of CDB, commented, "CDB promotes the advancements in market-driven interest rate reforms, and support the cultivation of the floating rate bond market. We aim to explore policy transmission mechanisms across the interest rate curve through market price discovery, and to continuously promote the development of the bond market.”
Ms. Patty Li, Executive Director of FICC Department of China International Capital Corporation Limited (“CICC”), the onshore underwriter who facilitated the cross-border subscription via iDeal, commented, “CICC is honored to maintain a close relationship with BCCL and is proud to have successfully assisted offshore investors in participating in the primary auction of CDB's floating-rate bonds via ePrime Northbound Subscription Service. CICC is committed to promoting cross-border trading activities between China and international bond markets. CICC will continue to collaborate closely with BCCL, to effectively guide foreign investors to participate in China's onshore primary market.”
Mr. Tony Wang, General Manager of BCCL, commented, "The issuance highlights CDB's ongoing commitment to innovation and is an important step in promoting the establishment of interest rate benchmarks and the enhancement of monetary policy transmission mechanisms, expanding the depth and breadth of the China bond market. BCCL is honored to support foreign investors in subscribing to this innovative floating rate bonds and will continue to work closely with CDB in promoting the development of the China bond market."
In collaboration with CFETS and launched in October 2020, ePrime is an electronic solution for the primary bond market that spans across issuers, underwriters and investors specialized in the China cross-border workflow. It has two components to cater for issuance and subscription applications: ePrime Issuance Service and ePrime Northbound Subscription Service.
ePrime Northbound Subscription Service allows international investors to participate in the Northbound subscription of CIBM new issuances with onshore underwriters through the connectivity between ePrime and iDeal. It supports the cross-border subscription of various types of bonds, such as CGBs, PFBs, green financial bonds, MTNs, CP/SCPs etc, with 66 international investors onboarded.
Please contact us at eprime@chinabondconnect.com / (852) 2327 0398 for enquiries.
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