Gazprombank, Russia’s third largest bank, has raised Rmb1 billion from the Hong Kong dim sum market and sold the highest percentage of notes to Europe in the offshore market.
The lender priced the 3-year bonds at 4.25% after conducting a 4-day roadshow in Asia together with an investor call, which generated good anchor demand and shaved 125 basis points off the initial price guidance of 4.375%.
The book received total orders of Rmb2 billion from 67 investors, including funds and asset management companies (45%), private banking clients (42%), banks (7%) and others (6%).
What’s interesting is that investors from Europe took the biggest part - 41% of the deal. The portion is the highest in the offshore renminbi market from European investors. Hong Kong investors took 40%, Singapore 14% and Taiwan 5%.
The reason for its popularity in Europe is that it’s a familiar name and a repeat issuer in USD, Euro, as well as Swiss franc bond markets. Many European participants in the Gazprombank deal come from London and Switzerland.
Gazprombank also has a record in dim sum bonds offerings as it issued its first Rmb500 million bonds last February with a coupon of 4%.
More and more dim sum bonds see European investors as a major target. Two weeks ago, the London branch of Bank of China sold 40% of its Rmb2.5 billion renminbi-denominated bonds to the area, a record high at that time.
In October 2013, renminbi usage in traditional trade finance grew from an share of 1.89% in January 2012 to 8.66% in October 2013, propelling the currency to the second most used currency in this market, behind the US dollar but ahead of the euro, according to information provider Swift’s renminbi tracker.
However, not all dim sum from European names have gained investors from the area. Last week, Germany auto company Volkswagen priced its Rmb1.2 billion five-year dim sum at 3.5%. Only 10% was sold to Europe but 90% to Asia.
“Volkswagen leaves a premium to the peers and that attracted a lot [of] price-sensitive Asian investors,” explained a source familiar with the situation.
BOC International, GPB Financial Services - a wholly owned subsidiary of Gazprombank - and HSBC were joint bookrunners on the Gazprombank transaction.
