Hang Seng China issues 1.83 billion yuan of NCDs through Bond Connect

Hang Seng China has just issued negotiable certificates of deposit (NCD) with a total value of 1.83 billion yuan (US$265 million), allowing foreign institutional investors to invest directly in the primary NCD market through Bond Connect.

The bank is the first foreign bank in China to issue such an instrument and it offered the one-year NCD at interest rate of 3.37 percent to both domestic and overseas institutional investors.

Negotiable certificates of deposit are fixed deposit receipts that can be sold in a secondary market and large institutions are the most common buyers.

To date, eight institutions have made the subscription, including commercial banks, overseas branches of domestic commercial lenders, major state-owned banks and domestic commercial banks, as well as foreign banks and securities companies in China.

Ryan Yue Sheng Song, vice chairman and chief executive of Hang Seng’s China business, said direct NCD issuance to foreign institutional investors through Bond Connect reflects further opening up the financial sector.

It was also a significant step toward strengthening economic ties and cooperation between the mainland and Hong Kong, he added.

Launched in 2017, Bond Connect is a mutual trading scheme between the bond markets in the mainland and Hong Kong. This April, the scheme launched an NCD primary subscription service directly to foreign institutional investors.