RMB 1.5bn Schengen bond issued by Bank of China in Luxembourg
On 8th May 2014, Bank of China Limited, Luxembourg Branch listed its first offshore-RMB “Schengen” bond on the Luxembourg Stock Exchange for an amount of RMB 1.5 billion. The transaction is done under the USD 10 billion MTN programme of the Bank of China Group. With the support from international and local institutional investors, the issuance was around 2 times oversubscribed. It was priced at 3.50% for the 3-year bond.
The “Schengen” bond has enabled Bank of China to become the first Mainland China company to launch its RMB bonds in the Eurozone. The choice of Luxembourg as a listing place reflects the commitment of the Bank of China Group towards Europe and especially Luxembourg as an international financial center.
This first offshore-RMB bond was named ‘Schengen’ bond by reference to the small Luxembourg village situated in the beautiful Moselle Valley on the border with France and Germany and which gave its name to the travel area among 26 European countries. The pronunciation of ‘Schengen’ in Chinese represents the meaning of “root here and develop here”.
Yesterday’s successful launch of the RMB 1.5 billion Schengen bond is a further step towards the internationalization of the Renminbi and shows the commitment of Bank of China, China’s most international and diversified bank with a history of more than 100 years, to promote Luxembourg as a RMB Clearing Center in Europe.
Bank of China chose Luxembourg in 1979 to set up its very first international presence since the foundation of The People's Republic. Along the years, BoC Luxembourg has increasingly become Bank of China's European hub and today the bank manages from this very central location a number of branches in other European jurisdictions.