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NSW TCorp paves way for yuan bonds in Australia
November 20, 2014 / 1:27 AM / 3 years ago

NSW TCorp paves way for yuan bonds in Australia

SYDNEY, Nov 20 (Reuters) - Australia’s New South Wales Treasury Corp (TCorp) made its yuan debut with the sale of a 1 billion yuan ($163.43 million) bond, the first such debt issued by an Australian government entity, it said on Thursday.

The offer came the same week that China and Australia finalised a landmark free trade deal and Sydney was made into the latest offshore hub for trading the Chinese currency.

TCorp is the funding arm of Australia’s most populous state and is rated triple A by Standard & Poor’s and Moody‘s.

The 1-year bond pays a yield of 2.75 percent, less than the 2.85 percent initially marketed. Lead managers ANZ and Bank of China said they received more than 1.4 billion yuan of interest.

Around a quarter of the issue was placed in Australia, while 44 percent found a home in Asia and the rest was split in Europe and the Middle East, one of the leads said.

By type of investors, banks bought 56 percent, fund managers 21 percent, central banks 19 percent. The balance was sold to private banks.

Proceeds were swapped back in Australian dollars, but cost details were not disclosed.

Fiona Trigona, head of funding at TCorp, said the launch of the offer coincided with Sydney becoming a renminbi hub and the intention is to sell more yuan bonds.

Bank of China, the fourth-biggest lender in China, was appointed this week as the official yuan clearing bank in Australia, making it easier for investors to complete financial transactions. Instead of paying foreign exchange fees in Australian dollar-U.S dollar-renminbi, the agreement would reduce the costs to Australian dollar-renminbi.

Sydney joins Seoul, Paris, Luxembourg, London, Frankfurt, Singapore, Toronto, Qatar and Hong Kong as global centres for yuan trading.

Australian borrowers have recently started to issue yuan-denominated bonds with securities listed on the Australian stock exchange.

Earlier this year, a portion of the massive $7.8 billion loan for Australia’s Roy Hill iron ore project was funded in yuan. (1 US dollar = 6.1190 Chinese yuan) (Reporting by Cecile Lefort; Additional reporting by John Weavers; Editing by Kim Coghill)

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