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Bank of China issues first 'Yulan' bond

Feb 4 (Reuters) - The Brussels-based securities depository Euroclear said on Friday that Bank of China had become the first issuer of a so-called Yulan bond, a new asset class designed to link Chinese issuers with global investors.

Bank of China’s issuance of $500 million in three-year Yulan bonds was four times oversubscribed, Euroclear said in a statement, without providing details.

Yulan bonds are issued through Shanghai Clearing House, which serves the Chinese interbank bond market. But international investors settle the securities within Euroclear’s network, and thus do not need to understand the Chinese settlement system.

Euroclear and Shanghai Clearing House announced the asset class, named after Shanghai’s city flower, the magnolia, in December.

The Regulation S bond, issued by Bank of China through its Hong Kong branch, bears a 0.75% coupon and was issued at a spread of 67 basis points over U.S. Treasuries, according to Refinitiv data.

The rating agency Moody’s had previously assigned an A1 rating to the issuance, and Fitch Ratings rated the bond A. (Reporting by Andrew Galbraith; Editing by Kevin Liffey)

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