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China : First OTC Financial Bond Successfully Issued

June 10, 2014

The first OTC financial bond of China Development Bank was successfully issued by ICBC from May 6 to 8. As a major innovation of the relevant parties to promote inclusive finance and build a multi-level bond market system under the leadership of the People s Bank of China, the successful issue of OTC bond marks a new stage of OTC bond business.

The bond has one year term with a coupon rate of 4.5%. A total amount of RMB 2 billion OTC bond has been issued through ICBC s outlets in China and e-banking. Retail investors and non-financial institutional investors subscribed USD1.545 billion and RMB455 million of the bond respectively. The financial bond of China Development Bank has been well received by retail investors and non-financial institutional investors for its advantages such as safety, good yield, liquidity and low investment threshold.

According to the executives from both sides, ICBC and CDB has actively responded to the PBOC s announcement on diversifying OTC bond types this March by making early attempt and completing the preparation and issue of the first OTC financial bond within 40 days, which effectively met the public investment needs for safe, transparent high-rating bond products with moderate returns.

ICBC will introduce other innovative OTC bonds such as government backed institutional bonds and CDB will also issue more diversified bond products over the counter of commercial banks to enrich the bond market structure and meet the investors needs.

The bond will be listed on May 13. ICBC will provide bilateral quotation and market-making service for customers. Customers can buy or sell the bond through ICBC internet banking and mobile banking or at its outlets in China within the trading hours and the transactions will be cleared on a real-time basis.

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Source: TendersInfo (India)

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