Bank of China issues S$500m Silk Road bonds in Singapore

SINGAPORE — Bank of China has turned to the Singapore bond market to raise funds that will be used to support China’s “One Belt, One Road” initiative to boost infrastructure links between Asia and Europe.

The bank yesterday said its Singapore branch issued a four-year S$500 million senior unsecured bond priced at 2.75 per cent on Wednesday, as part of the bank’s multi-tranche, multi-currency bond offering to support efforts to create a modern Silk Road economic belt and a 21st century marine Silk Road to boost trade.

Rated A1 by credit rating agency Moody’s and A by Fitch Ratings, the issue was around three times oversubscribed, attracting close to 100 investors comprising banks and institutional funds. Bank of China said the issue was the largest Singapore-dollar senior unsecured bond by a commercial bank in the city state. The lender is also the only Chinese bank to launch a benchmark-sized Singapore-dollar bond — one that is S$500 million and above — locally in recent years.

Bank of China also launched 5 billion yuan (S$1.08 billion) worth of yuan bonds. Of these, the 2 billion offshore yuan portion from its Abu Dhabi branch, with a two-year tenure, was priced at 3.6 per cent. The other 3 billion yuan worth of debt paper will be issued by its Taipei branch late this month in four tranches with five-year, seven-year, 10-year and 15-year maturities.

Both the Singapore-dollar and yuan bonds will be listed on the Singapore Exchange (SGX), the bank said.

Ms Guo Ning Ning, general manager of Bank of China Singapore branch, said: “The successful issuance of the S$500 million bond and listing of the 5 billion yuan bond on the SGX demonstrates Bank of China’s utmost commitment to supporting the development of Singapore as a leading offshore yuan centre. It further reflects Bank of China’s strong confidence in Singapore’s economic development.”

The bank’s “One Belt, One Road” bonds were issued in four currencies — the US dollar, euro, yuan and Singapore dollar — raising a total equivalent to about US$4 billion (S$5.37 billion). Pricing in all currencies was achieved on the same day, reflecting investors’ confidence even as the Greek debt crisis comes to a head.

The monies raised will be used to support projects including building the Eurasian Land Bridge connecting China to Russia and Central Asia, as well as maritime links through major seaports.

Chinese President Xi Jinping announced a US$40 billion commitment to set up a Silk Road infrastructure fund last November. The fund’s initial US$10 billion capital came from China’s foreign-exchange reserves and state-owned policy institutions. Lee Yen Nee