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China Issues RMB Bond In Hong Kong

August 2011 - Finance. Legal Developments by Hassans.

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The Chinese Ministry of Finance has confirmed that a tender of RMB15bn (USD2.34bn) in sovereign bonds will be held on August 17 through Hong Kong's Central Moneymarkets Unit.

A total of RMB6bn in three-year bonds, RMB5bn in five-year bonds, RMB3bn in seven-year bonds and RMB1bn in 10-year bonds will be made available to institutional investors by way of competitive tender. The bonds, to be issued at par value, will therefore mature in 2014, 2016, 2018 and 2021 respectively.

Each series of bonds will bear an interest rate determined through the highest accepted interest rate for the relevant series, payable semi-annually in arrears on February 18 and August 18. Each tender must be for an amount of RMB500,000, or integral multiples thereof.

The bonds will constitute direct, unsubordinated and unsecured obligations of the Chinese government, and will not be subject to individual or enterprise income tax or stamp duty in China, nor to profits tax or stamp duty in Hong Kong.

Hong Kong's Financial Secretary John Tsang had previously welcomed the Chinese government intention to issue the bonds in Hong Kong, its third. This round of issuance of bonds demonstrates clearly the Central Government's support for Hong Kong's development as an offshore RMB business centre, as announced in the 12th Five-Year Plan, he said.

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