IFC issues 150mn renminbi bond in Hong Kong

The five-year bond aimed to support clean technology project in China.

IFC, a member of the World Bank Group, launched on Wednesday its first renminbi-denominated bond in Hong Kong SAR (China), using the proceeds to finance a clean technology project in China. It marks the first issue by a supranational to raise funding from offshore renminbi market for a specific mainland project.

The five-year bond has a 1.80 percent per annum interest rate and raised 150 million renminbi (around $23 million) to support technology that helps to promote energy efficiency and to lower greenhouse gas emissions, one of IFC’s strategic priorities in China. The proceeds will help finance the expansion of Beijing Shenwu Thermal Energy Technology Company Ltd’s operations. Shenwu designs and manufactures industrial furnaces using regenerative high temperature air combustion technology that lowers energy use and carbon dioxide emissions in steel and petrochemical production, according to an IFC report.

“This issue marks the start of a medium-term renminbi bond program to support private Chinese companies which cannot yet directly go to the market,” said Nina Shapiro, IFC Vice President, Finance and Treasurer. “In Hong Kong, IFC credit is well placed to tap the renminbi market in smaller denominations to fund priority projects in China."

IFC’s loan to Shenwu is expected to avoid 1.65 million tons of carbon dioxide emission per year, as well as create 600 jobs in Shenwu’s manufacturing facilities in Hubei, one of the poorer regions in China, and in Beijing. As a long-term investor and advisor, IFC will also help connect Shenwu with global industry best practice, as well as share its experience in successfully promoting private technology companies.

“We appreciate the partnership with IFC very much,” said Dr. Daohong Wu, Chairman of Shenwu. “IFC not only offers long-term finance and strong credibility, but also standard-setting and global clean technology sector knowledge.”

The issue was made possible by close cooperation between IFC and the Hong Kong Monetary Authority as well as the Chinese authorities. IFC has coordinated its East Asia and Pacific business out of its regional hub office in Hong Kong during the last 10 years, and IFC credit has been established in the Hong Kong dollar market over the past 20 years.

In October 2005, IFC also became the first international financial institution to issue Panda Bonds, renminbi-denominated bonds from a non-Chinese issuer sold in the domestic bond market of the People’s Republic of China.

HSBC was mandated to arrange the issue. Anita Fung, Group General Manager, Head of Global Banking and Markets, Asia-Pacific, HSBC, said, "The launch of the IFC's first renminbi-denominated bond issuance clearly demonstrates that leading issuers place great confidence in Hong Kong's ability to support an offshore renminbi bond market and attract key investors. HSBC is proud to bring this landmark deal to market and to continue playing a pivotal role in supporting Hong Kong's evolving position as an offshore renminbi centre."