Bonds Apr 02

First yuan bond issued in Central Asia

'Falcon' bond issued in Hong Kong and Kazakhstan, which hopes to play a key role in Belt and Road projects linking China to Europe

by Chris Gill
First yuan bond issued in Central Asia
An attractive evening view of Nur-Sultan, the capital of Kazakhstan, formerly known as Astana. Photo: Wikipedia  

(ATF) China’s first yuan bond in Central Asia was launched at Nur-Sultan (formerly Astana) in Kazakhstan, recently. The offshore yuan bond called the 'Falcon Bond' was issued by China Construction Bank's Nur-Sultan branch at the Astana International Exchange and the Hong Kong Stock Exchange.

According to Xinhua, Wang Songhua, general manager of China Construction Bank's Nur-Sultan Branch, the bond issuance amounted to 1 billion yuan. It has a two-year term and an interest rate of 2.95%.

Wang serves as joint global coordinator, joint account manager and joint lead manager. Funds raised from the bonds will be used to support the construction of “Belt and Road” related projects.

Krimbetov, chairman of the Astana International Finance Center (AIFC), said the first yuan bond issuance was an important result for financial cooperation between Kazakhstan and China under the “Belt and Road” framework.

It would help promote the Astana International Finance Center, Kazakhstan and the whole development of an offshore yuan market in Central Asia, he said.

In July 2019, China Construction Bank's Astana Branch, CITIC Securities Co Ltd and Astana International Exchange signed a tripartite cooperation memorandum to jointly establish an offshore yuan center to jointly promote cross-border yuan settlement and offshore yuan bonds, and other businesses.

BRI projects

China and Kazakhstan have signed agreements to build Belt and Road Initiative projects, and Kazakhstan has been seen as key to plans to link China to Europe – and the labelled the "Buckle" on the BRI scheme. But some of these projects have run into problems. Pillars for a US$1.9 billion light rail system stand incomplete in the Kazakhstan capital. 

Large infrastructure projects have run into corruption problems before and the nature of the current hold-up is unclear. However, the two countries seem intent to surmount such difficulties.

Chief Executive Officer of the Astana International Exchange, Tim Bennett, said: “AIX welcomes the listing of the first RMB (yuan) bond on AIX which is also the first RMB (yuan) product of the AIX Belt & Road Market.

"This issue is an innovative model of financing Belt & Road Initiative projects which will contribute to the development of the local economy and create new job opportunities.”

The Astana International Finance Centre  has 423 registered companies and has sought to position itself as a regional centre for business and finance, connecting the economies of the Central Asia, the Caucasus, EAEU, West China, Mongolia, Middle East and Europe.

It aims to become the RMB/yuan clearing and settlement regional center in Kazakhstan, where the Belt & Road Initiative was first announced in 2013, as well as in the region.

AIX Belt and Road Market is a site where yuan/RMB securities, including bond, equities and other products can be listed and traded. AIX expects more yuan issuances from diversified issuers to help it become a securities listing and trading center for Central Asia.

CCB Astana Branch, the first foreign commercial bank’s branch registered under AIFC jurisdiction, was appointed as the AIFC's yuan/RMB clearing bank in 2019.