Bank of China issues global Silk Road bond, includes $500 million tranche

SINGAPORE - The Singapore branch of Bank of China has issued a S$500 million senior unsecured bond, part of its multi-tranche, multi-currency US$3.55 billion bond for Silk Road projects meant to improve infrastructure links between Asia and Europe.

This is the largest-ever Singapore dollar senior unsecured bond issued by a commercial bank in Singapore.

Wednesday's deal involved four currencies - US dollar, euro, Singapore dollar and yuan - issued from four BOC branches (Abu Dhabi, Hong Kong, Hungary, Singapore) simultaneously, the bank said in a statement.

In addition to the Singapore dollar issuance, Bank of China also launched a renminbi (RMB) 5 billion bond on the same day. Bank of China will list both bonds on the Singapore Exchange to commemorate Singapore's 50 years of independence.

Rated A1 by Moody's Investors Services and A by Fitch Ratings, the four-year bond saw strong investor interest, with the issuance drawing close to 100 investors and being three times oversubscribed.

The bond is priced at 2.75 per cent - far below the initial price guidance, reflecting investors' confidence in the Bank of China Singapore branch.

"With its strategic location and established reputation as a global financial hub, Singapore is an important centrepiece to the '21st Century Maritime Silk Road' strategy," BoC general manager and country head Ms Guo Ning Ning said. "It further reflects Bank of China's strong confidence in Singapore's economic development."

Under the so-called "One Belt, One Road" initiative, China aims to create a modern Silk Road Economic Belt and a 21st Century Maritime Silk Road to boost trade and extend its global influence.

President Xi Jinping announced a US$40bn commitment to set up a Silk Road infrastructure fund last November.

rupsk@sph.com.sg