Hong Kong Monetary Authority Announces Results of 3-Year RMB Government Bond Tender

Felix Pinkston Oct 24, 2024 13:06

The Hong Kong Monetary Authority reported high demand for its 3-year RMB HKSAR Government Bonds, with a bid-to-cover ratio of 7.21, indicating strong investor interest.

The Hong Kong Monetary Authority (HKMA), representing the Hong Kong Special Administrative Region Government (HKSAR Government), disclosed the results of its recent tender for 3-year RMB institutional Government Bonds. The tender, conducted on October 24, 2024, showcased robust demand amidst investors, according to the HKMA.

Strong Demand for Government Bonds

The HKMA offered RMB 1.0 billion worth of 3-year Government Bonds under the Infrastructure Bond Programme. The tender attracted applications totaling RMB 7.212 billion, resulting in a bid-to-cover ratio of 7.21. This ratio highlights the high demand, with applications significantly exceeding the amount available.

Tender Results and Financial Details

The bonds, issued under the code 03GB2710002, carried a coupon rate of 2.13%. Investors accepted an average price of 100.54, which translates to an annualized yield of 1.953%. The lowest price accepted was 100.29, yielding 2.040%, while the average tender price was 99.99, yielding 2.146%.

Additional details from the tender include a pro-rata ratio of about 45%, indicating the allocation method used due to the high demand. The bonds are set to mature on October 28, 2027, with settlement scheduled for October 28, 2024.

Significance of the Tender

This tender is part of the HKMA's ongoing efforts to develop the local bond market and provide a stable investment avenue in RMB-denominated securities. The strong interest reflects confidence in the HKSAR Government's financial instruments and the broader economic stability of Hong Kong.

The results of this tender further underline the growing appetite for RMB bonds, as investors seek to diversify their portfolios with assets denominated in the Chinese currency. This trend aligns with Hong Kong's strategic position as a leading financial hub, especially in RMB internationalization.

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