The World Bank may issue yuan- denominated bonds in Hong Kong again when borrowing costs become more favorable, according to Michael Bennett, its head of derivatives and structured finance.
International Finance Corp., a member of the World Bank Group, sold 150 million yuan ($23.5 million) of five-year Dim Sum bonds with a 1.8 percent coupon in January 2011, according to data compiled by Bloomberg. The debt yielded 2.35 percent yesterday. The average yield on yuan bonds in Hong Kong climbed 50 basis points to 5.53 percent this quarter, according to an index by Bank of China Ltd.
“In principle, we are very open to selling more Dim Sum,” Bennett, who is based in Washington D.C., said in an interview in Hong Kong. “For us, because we are a U.S. dollar-based institution, our ability to issue in any currency is probably dependent on after-swap costs in U.S. dollars. The opportunity comes and goes based on that level.”
The World Bank will start selling an emerging-market bond fund in Hong Kong tomorrow. Some 85 percent of the fund will be World Bank notes denominated in the currencies of emerging- market countries, with the remainder allocated to U.S. Treasuries, Chinese government debt and short-term bank deposits.
BOCHK Asset Management Ltd., which was hired to manage the fund, is looking to market it in Taiwan, Malaysia and Europe, said Au King Lun, chief executive officer of the asset manager.
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