The Province of British Columbia, Canada, has settled its second bond in the Chinese renminbi (CNH) market, raising RMB 3 billion, Finance Minister Michael de Jong announced during a visit to the Hong Kong stock exchange today.

The two-year issue yielded 2.85% and raised about $559 million Canadian (1CAD:5.3668 RMB). The bond was among the largest ever from an international issuer in the CNH market, equalling the United Kingdom’s issue earlier in October and surpassing the Province’s previous issue in 2013. Proceeds from the bond will be deposited with the Bank of China, where a small positive return will be earned.

B.C.’s triple-A credit rating made the bond very attractive to investors. Initial marketing was for a benchmark size of RMB 1 billion and the issue was capped at RMB 3 billion. Total subscription was more than RMB 6.5 billion. Global demand for the Province’s debt issues has increased in recent years, due in large part to B.C.’s stable economic and fiscal performance compared to other governments in Canada and abroad.

The two-year RMB-denominated bond is a statement of continued confidence by British Columbia in the importance and global emergence of China’s renminbi, and reflects the provincial government’s desire to promote stronger relationships between China, B.C. and Canada.

The bond issue coincided with the announcement by the governments of China and Canada that designated a Canadian RMB trading hub. A Canadian RMB hub will make the use of renminbi in B.C.-China trade, commerce and investment easier for Canadian financial institutions and their customers.

For B.C. firms doing business in China, using renminbi can be more efficient than using a currency of an unrelated country, typically the U.S. dollar. A Canadian hub can also help expand the range of financial products and services denominated in the Chinese currency, further helping B.C. firms do business in China.

A Canadian RMB hub will leverage the competitive advantages of both Vancouver and Toronto for the benefit of Canada. Enabling businesses to conduct trade transactions in RMB will make it much easier for Canadian businesses to do business in China.

Establishing Canada as a renminbi trading hub fits with B.C.’s long-term strategy to strengthen economic ties with China and the Asia-Pacific region in general. A Canadian renminbi hub has many mutual benefits for Canada and China, including expanding bilateral trade and providing a critical link for renminbi transactions in North and South America.

Following British Columbia’s first RMB bond issue in 2013, the province collaborated with the Government of Ontario, AdvantageBC, the Toronto Financial Services Alliance (TFSA) and the financial services industry to promote the establishment of a Canadian renminbi trading hub. B.C. also established a working group to investigate the opportunity for Canada to become a global RMB hub.

Quotes:

Minister of Finance Michael de Jong -

“This second issue of an RMB-denominated bond proves that British Columbia is committed to expanding our connections to China across financial and economic sectors. We view the renminbi as a significant global currency and relatively untapped source of capital.”

“A Canadian renminbi trading hub not only benefits B.C., but all of Canada by making it easier for Canadian businesses to do business in China. Every part of Canada is looking to expand and diversify export partners; establishing a Canadian renminbi hub reinforces those efforts.”

“An RMB hub for Canada opens new opportunities for Canadian businesses. It plays to Canada’s strengths as Asia’s gateway to North America and secures our economic and cultural ties to China while buttressing a strong and competitive financial sector.”

Quick Facts - RMB bond issue:

• About 44% of the bond was placed in Asia, 42% was placed in North America with the remainder placed in Europe and the Middle East.
• Central banks and official institutions bought 54% of the bond and banks took 26% with the balance purchased by fund managers and other institutional investors.
• This is the second time in 12 months the B.C. government has launched a successful renminbi bond in the Asia-Pacific market.
• HSBC and the Bank of China were joint lead managers on the province’s bond, and Industrial and Commercial Bank of China and Royal Bank of Canada were co-managers.
• In November 2013, the Province issued a one-year bond in the Chinese renminbi market, raising $428 million Canadian.
• B.C. was the first foreign government in this market.
• As both the liability and the asset are denominated in renminbi, there is no foreign exchange risk related with this transaction.

Media Contacts:

Janet Stewart
Communications Manager
Ministry of Finance
250 356-9872