* HSBC, StanChart sell renminbi bonds in Singapore
* Several issuers in Southeast Asia studying format
* Banks eye billions in business from the region
By Nethelie Wong and Christopher Langner
May 27 (IFR) - Singapore was staging another race on Monday, and it had nothing to do with Formula 1. HSBC and Standard Chartered each launched their first Singapore-settled offshore renminbi bonds today, overtaking local favourite DBS to become the first to issue renminbi-denominated bonds in the Lion City.
The sudden rush underlines the competition for bragging rights in the fast-growing offshore renminbi market, hinting at the potential that the three banks see for the currency in Singapore.
HSBC circulated a mandate termsheet on Friday (a public holiday in Singapore), before Standard Chartered (A2/A+/AA-) moved first on Monday morning with official price guidance of 3% area for a Reg S only three-year deal on the screens at 06:30 local time.
Not to be outdone, HSBC (Aa2/AA-/AA-) announced price guidance of 2.25% for its own two-year Reg S bond about an hour after Standard Chartered, and priced its Rmb500m (US$82m) deal first, at 15:00 Singapore time, with a yield of 2.25%.
"We are first on the offshore renminbi league table worldwide," said one banker at HSBC, adding that more important than the time is the lender's commitment to the Chinese currency. "It is part of everyone's mandate in HSBC here to develop the renminbi, be it in trade finance, invoicing, everything," said one banker at HSBC.
StanChart bankers, however, argued that the bank's Rmb1bn benchmark did more to create a market for the newest renminbi product - even if it priced a couple of hours later. StanChart's three-year bond priced with a coupon of 2.625%.
With settlement on May 31, five days ahead of HSBC's, StanChart's bond will also be the first one trading on the Singapore Exchange.
The Singapore Exchange backed up that argument in a statement naming StanChart's notes as "the first renminbi bond deposited with SGX."
"This is hugely important and it does not apply only to the bond market, it applies to trade and other aspects that renminbi clearing enables," said one StanChart source.
At the time of writing, DBS had yet to emerge with any issue despite taking the unusual step of announcing its plans to issue a Singapore-settled renminbi bond in a press release last Thursday evening.
REGIONAL HUB
The significance of creating the full suite of renminbi products in Singapore may run far beyond the city-state's own borders.
"Aside from financial infrastructure and economic ties, Singapore possesses a key geographical advantage. As the gateway to the Southeast Asia, it provides a platform for Beijing to facilitate wider use of the renminbi in China-Asean trade," said DBS Vickers analysts in a research report.
According to DBS Vickers, in 2012, exports from the Association of Southeast Asian Nations (Asean) to China surpassed US$195.8bn, almost nine times more than the US$22.2bn logged in 2000.
"As the renminbi's regional influence continues to grow, the renminbi clearing line will be utilized by not just Singapore but its trade partners too. This is a great opportunity for Beijing to promote the 'third party' usage of the renminbi (trades not involving China), a major attribute of any international currency," concluded DBS Vickers.
One banker said he expected at least half a dozen issues denominated in renminbi to appear in Singapore in the next month or so, mainly from Singaporean companies that have operations in China.
Issuers from other parts of Southeast Asia are also said to be looking at similar bonds. "We anticipate increased interest in similar transactions from Asian companies, given the greater ease of access to and familiarity with a Singapore-based clearing and settlement system," said Lenny Feder, group head of financial markets at Standard Chartered.
A handful of Singaporean issuers, including DBS, OCBC and Temasek-backed Global Logistics Properties, have already sold offshore renminbi bonds or certificates of deposit through the well-established Hong Kong market.
The Monetary Authority of Singapore recorded approximately Rmb60bn of renminbi deposits in the Lion City in June 2012, ahead of the Rmb50bn available in Taiwan but less than a tenth of the Rmb670bn in deposits in Hong Kong.
According to people close to the deals, all three banks, DBS, HSBC and Standard Chartered, had been working closely with the Chinese lender since China named ICBC the clearing bank for renminbi in Singapore, back on February 8.
The rush to market comes on the day that ICBC Singapore introduced renminbi clearing services for banks in the city-state, opening the door for the first locally settled transactions in the currency.
"Today marks an important milestone in a long-term trajectory of growth for the renminbi market in Singapore," said Henrik Raber, global head, DCM, Standard Chartered.
As more renminbi financings emerge in Singapore, bankers expect DBS, HSBC and StanChart to figure often among the bookrunners. Regardless of who priced their own deal first, the real winner of the race will be the one that does so the most often.