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Linklaters cashes in on Chinese bond sales with central bank’s international debut

The capital markets team at Magic Circle firm Linklaters has secured four bond issue mandates from Chinese banks as China’s president, Xi Jinping, makes his first state visit to the UK.

With China looking to open up an offshore renminbi debt market, Linklaters was instructed by the People’s Bank of China on its debut international bond sale. Hong Kong partner William Liu combined with London partner Andrew Carmichael to advise China’s central bank on what is the first issuance of renminbi government bonds outside of China. The one-year bonds, set to produce a 3.1% yield, were in high demand and six times oversubscribed. 

Liu says the UK ‘was chosen ahead of possible launches in Europe and the US for the deal’ and that this ‘sends a strong signal about the attractiveness of London as a global financial centre’.

He added: ‘The purpose of the issue is to increase the supply of high quality bonds in the offshore Chinese Yuan Renminbi (CNY) market, increase the supply of high quality high grade collateral in the offshore CNY market and establish a benchmark interest rate for the CNY offshore market to facilitate bond issuance and trading in the offshore market.’

The instruction follows a string of advisory roles for capital markets deals being marked at London Stock Exchange listing ceremonies in London this week to coincide with President Xi Jinping’s first state visit to the UK. Liu and Carmichael were also picked to advise China Development Bank on its first issuance of offshore renminbi bonds in more than 10 years last week, and the country’s third-largest lender Agricultural Bank of China, on its sale of two currency bonds in London.

Linklaters was also the lead manager as China Construction Bank sold two-year offshore renminbi bonds, yielding 4.3%, in London. On this deal Carmichael teamed up with Hong Kong capital markets partner Hwang Hwa Sim.