African Banking Giant Places First Offshore RMB Bonds With Central Banks

Vanessa Doctor

8 August 2012

Africa's Standard Bank has agreed to be the sole bookrunner for the latest placement of China Development Bank's RMB500 million ($78.5 million) worth of three-year offshore RMB bonds to African central banks.

This is the first time African banks have participated in RMB bond investment in primary markets. CDB is a major state-owned bank in China.

The landmark sale to Africa was a tranche of CDB's recent RMB2.5 billion bond offering, in which Standard Bank served as one of the bookrunners and lead managers.

China Development Bank issued three-year and 20-year offshore RMB bonds in Hong Kong with participation from both Asian and non-Asian investors. Around 60 per cent of the total bonds were allocated to European, Middle East and African investors. Standard Bank's allocation accounted for one-fifth of the total bonds CDB issued and was the highest among all the bookrunners and lead managers.

"The allocation to African banks is a reflection of the latest trend in the currency reserve strategies of some African nations, which have started to include the RMB in their foreign exchange reserve portfolios. This is key to the internationalisation of the currency," saidBing Fan, managing director of Standard Bank China.

Africa presents a major growth opportunity for the renminbi, with RMB36 billion in trade done in the Chinese currency completed in 2011 alone.

Standard Bank's largest shareholder is Industrial and Commercial Bank of China, with a 20.1 per cent interest. The bank and ICBC also share a strategic partnership that facilitates the flow of trade and deals between Africa, China and other emerging markets.

Standard Bank records ZAR1,379 billion ($203 billion) in total assets as of 30 June 2011. Its offices in Asia are in Beijing, Shanghai and Hong Kong.