HKMA Reports Strong Demand in 3-Year RMB Bond Tender Results

The Hong Kong Monetary Authority (HKMA), acting on behalf of the Hong Kong Special Administrative Region Government, revealed the outcome of its latest tender for 3-year RMB institutional Government Bonds. The tender, held on October 24, 2024, demonstrated significant interest from investors, as reported by the HKMA.

Strong Interest in Government Bonds

The HKMA issued RMB 1.0 billion in 3-year Government Bonds through the Infrastructure Bond Programme. The tender received applications that totaled RMB 7.212 billion, yielding a bid-to-cover ratio of 7.21. This ratio underscores the substantial demand as applications vastly outnumbered the available bonds.

Tender Outcomes and Financial Insights

These bonds, identified by the code 03GB2710002, featured a coupon rate of 2.13%. Investors accepted an average price of 100.54, which equates to an annualized yield of 1.953%. The lowest accepted price stood at 100.29, yielding 2.040%, while the average tender price reached 99.99, yielding 2.146%.

Additional tender specifics indicate a pro-rata ratio of approximately 45%, which determines the allocation method employed due to heightened interest. The bonds are scheduled to mature on October 28, 2027, with a settlement date of October 28, 2024.

Importance of the Tender

This tender is a continued initiative by the HKMA to enhance the local bond market and offer a reliable investment option in RMB-denominated securities. The notable interest signifies trust in the financial instruments of the HKSAR Government and the overall economic stability of Hong Kong.

The outcomes of this tender emphasize the increasing demand for RMB bonds, as investors aim to diversify their holdings with assets denominated in the Chinese currency. This trend is in line with Hong Kong’s strategic role as a premier financial center, particularly in the internationalization of the RMB.

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