RMB round-up: Xi orders watchdog to prevent financial risk, VW Financial’s China arm strikes second onshore bond, UK remains biggest centre for RMB FX trading

Chinese president Xi Jinping orders authorities to take action to prevent financial risk, Volkswagen Financial Services’ China arm issues its second renminbi-denominated bond, and the UK reaffirms its status as the biggest centre for RMB FX trading.

  • By Noah Sin
  • 28 Apr 2017
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FX:

  • People’s Bank of China (PBoC)'s renminbi fix against the dollar was set at 6.8931 this morning, up 35bp from Thursday. In the spot market, the CNY was trading at 6.8974 as of 4.39pm, with the CNH at 6.8992, down 0.01% and 0.03% from their previous close, respectively, according to Bloomberg data.
  • The dollar index was trading at 99.047 as of 4.19pm, up 0.03% from the previous close, according to Bloomberg. The Thomson Reuters CNY reference index closed at 93.85 on Friday, up 0.1% from its previous close.

Regulators:


  • China will make renminbi fully convertible and grant foreign investors greater access to its financial markets, deputy PBoC governor, Yi Gang, told a conference in New York on April 24, according to South China Morning Post. "We have to work on removing existing barriers for the internationalisation of the renminbi so that we can make the renminbi a freely usable currency," said Yi.
  • Chinese president Xi Jinping has called on financial regulators to take action to prevent systemic risks, according to Xinhua. Speaking at a politburo meeting on April 25, Xi committed to further financial sector reforms to maintain the sector’s competitiveness, but added that regulators must focus on improving accountability and compliance among financial institutions, strengthening supervision and closing supervision loopholes.
  • "Finance is the core of a modern economy […] We must do a good job in the financial sector in order to ensure stable and healthy economic development," said Xi.


Bonds:

  • VW Financial Services (China) has issued its second renminbi-denominated bond. The company priced its Rmb4bn 5.20% 2020s on April 24. Citic Securities and China Construction Bank are the lead arrangers for this deal. Both the bond and issuer are rated AA+ by domestic rating agency, China Lianhe Credit Rating.
  • “[This issuance] is an important step in intensifying our Chinese capital market activities,” said Bernd Bode, head of group treasury and investor relations. “It is our intention to refinance our growth in China locally within that country and in a diversified manner."

RMBi:

  • Chinese regulators risk sending mixed signals to foreign investors with tight capital controls, warned Reserve Bank of Australia Governor, Philip Lowe. But Rowe also praised his Chinese counterparts for efforts to internationalise renminbi, and said the currency’s internationalisation could bring immense benefits to the world, if the process is managed well.
  • “China is going through an important transition,” said Lowe on April 28. “The effects of this transition – involving the internationalisation of the renminbi and the opening up of the capital account – could ultimately be as wide ranging as were the effects of China's ascension to the World Trade Organisation.”

Hubs:

  • According to a special edition of SWIFT RMB Tracker report, 36.3% of all RMB FX transactions offshore renminbi transactions in March were conducted by the UK. This puts the UK ahead of Hong Kong, which took 29.3% of all transactions. United States and France are tied on 7.3% and Singapore is fifth with 5%.
  • The report, which was published alongside SWIFT’s Business Forum in London on April 25, also showed that RMB was the number currency for payments between the UK and China/Hong Kong. In addition, 50% of financial institutions are using RMB to exchange payments with Hong Kong and China.
  • Commenting on SWIFT data’s findings, Vina Cheung, global head of renminbi internationalisation at HSBC, said the figures show that business globally are beginning to recognise benefits of using renminbi as a settlement currency.
  • “Payments in renminbi from the UK have been growing in strong momentum over the year and continue to do so,” said Cheung. “This trend [underscores] the active trade settlement in renminbi for companies between the UK, Hong Kong and Mainland China as the understanding of the payment processes and commercial benefits from using the currency matures around the world.”
  • Meanwhile, the report showed that the renminbi remains the remains sixth most active currency for payments globally by value. 

  • By Noah Sin
  • 28 Apr 2017

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 30.14
2 CITIC Securities 23.05
3 China CITIC Bank Corp 10.64
4 Industrial and Commercial Bank of China (ICBC) 8.27
4 Everbright Securities 8.27

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 14-Sep-17 Bank of China (Hong Kong) (BOCHK) China 9,000
2 05-Sep-17 Joy City China 1,000
3 01-Sep-17 Rusal Russian Federation 500
4 23-Aug-17 Daimler Germany 5,000
5 02-Aug-17 China Gas Holdings China 1,500

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 JP Morgan 49.70
2 Barclays 10.06
2 Citi 10.06
2 HSBC 10.06
2 Bank of China (BOC) 10.06

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 01-Jun-17 Ocean Wealth (Parent: China Orient Asset Management) China 632
2 11-Apr-17 Bank of China Johannesburg Branch (BOC Johannesburg) China 1,500
3 22-Feb-17 Ocean Wealth (Parent: China Orient Asset Management) China 850
4 28-Nov-16 Loncin Holdings China 800
5 04-Nov-16 China Nuclear Engineering Group China 1,500