.png)
.png)
The Asian Infrastructure Investment Bank (AIIB) has successfully completed a public Hong Kong dollar-denominated bond issuance, raising HK$4 billion (US$549 million), the multilateral development bank announced on Thursday.
The three-year senior unsecured fixed-rate sustainable-development bonds carry an annual coupon of 3.847 percent and will settle locally through Hong Kong’s Central Moneymarkets Unit (CMU). The CMU is responsible for tracking and managing Hong Kong-dollar debt securities and other financial products.
The bond sale attracted strong demand from both domestic and Asia-Pacific investors, with the final order book reaching HK$9 billion and more than 25 orders, according to AIIB’s official statement. The issuance, the bank said, underscores the increasing openness of the Hong Kong dollar market and provides investors with an opportunity to diversify their assets while supporting AIIB’s expansion into public markets.
This issuance marks the first time Hong Kong dollar public bonds have been priced at a spread to the Hong Kong interbank offered rate (HIBOR) mid swap—the benchmark rate at which banks lend to one another in the city. According to AIIB’s treasurer, Domenico Nardelli, this type of large, liquid benchmark bond brings greater pricing transparency and provides a mechanism for interest-rate risk hedging, while also adhering to international market standards.
“The Hong Kong market is a stable market,” Nardelli said. “We have proven now it also [has] a deep pool of financial liquidity. It’s definitely something interesting for us and our class of issuers to explore further.”
The offering, backed by AIIB’s top-tier credit rating from all three major rating agencies, attracted orders surpassing HK$10 billion at its peak. A broad range of investors participated in the deal, including central banks, bank treasuries, asset managers, and local corporations, according to Standard Chartered, which acted as joint lead manager for the transaction.
“The depth and sophistication of the Hong Kong dollar market make it an attractive environment for issuers like AIIB,” said Darren Stipe, AIIB’s head of funding.
By conducting a public transaction settled within the CMU, AIIB was able to access a wider investor base while simultaneously enhancing liquidity in the Hong Kong dollar market, Stipe explained. The issuance attracted 15 new investors, he added.
“As more local and international issuers look for alternative funding opportunities in the Hong Kong dollar bond markets, we expect to see [that] market [grow further] with a more diverse mix of issuers and investors, strengthening Hong Kong’s status as an international financial centre,” said Jerry Zhang, global co-head of financial institutions coverage at Standard Chartered.
Both AIIB and various Hong Kong government agencies have previously engaged in private placements within the Hong Kong dollar-denominated bond market. AIIB’s latest issuance follows the Hong Kong Airport Authority’s record-breaking HK$15.8 billion public bond sale last month, the largest ever by a Hong Kong-based organization. The bond market has been seeing increased activity as borrowers seek to tap local currency financing amid slower-than-expected interest rate cuts from the United States.
Other notable institutions, including the Hong Kong Mortgage Corporation and the Urban Renewal Authority, have also issued substantial Hong Kong dollar-denominated bonds in recent months. The Hong Kong Mortgage Corporation raised HK$15 billion in bond issuances last year, while the Urban Renewal Authority launched HK$12 billion in notes.
Looking ahead, AIIB plans to continue diversifying its financing strategy by exploring funding opportunities across various markets, including Hong Kong and mainland China, Nardelli said. The bank’s overall funding target for the year is US$10 billion-equivalent, and nearly half of that amount has already been raised, he added.
By fLEXI tEAM
Comments