Shenzhen Municipal Government’s US$775 Million Offshore Bonds Offering

Linklaters advised the People’s Government of Shenzhen Municipality of Guangdong Province of the People’s Republic of China (Shenzhen Municipal Government) on its RMB 5bn (approx. US$775m) offshore multi-series bond issuance. Allen & Overy has advised the joint lead managers and joint bookrunners.

This is the first offshore bond issuance by the Shenzhen Municipal Government and by a municipal government in China.

The inaugural issuance, which is to be listed on the Hong Kong Stock Exchange, comprises three series’: RMB 1.1bn (approx. US$170m) 2-year bonds, RMB 1.5bn (approx. US$233m) 3-year bonds and RMB 2.4bn (approx. US$372m) 5-year bonds. The 2-year series are general government bonds and the 3- and 5-year series are special purpose government bonds, which are to be issued as green bonds, with the proceeds of the 3-year series to be used to finance water treatment projects and sponge city related projects, and the proceeds of the 5-year series to be used to finance clean transportation projects, each in accordance with the Shenzhen Municipal Government’s Green Finance Framework.

The bonds will be cleared via the Central Moneymarkets Unit Service operated by the Hong Kong Monetary Authority and the 3-year series and the 5-year series green bonds have received Pre-issuance Stage Certificates from the Hong Kong Quality Assurance Agency under its Green and Sustainable Finance Certification Scheme: 2021.

This landmark transaction paves the way to enhancing the collaboration and market integration of Shenzhen and Hong Kong SAR in the Greater Bay Area. The first offshore RMB bond issuance by a local government in China is a significant step in furthering the two-way opening of the Chinese financial market, encouraging foreign investments, and strengthening Hong Kong SAR as the global hub for offshore RMB business.

The Linklaters team was led by Asia Managing Partner, William Liu (Picture) and capital markets partners Michael Ng and Lipton Li, with support from managing associates Libin Shi and Allen Zhang.

The A&O team advised Bank of China, Standard Chartered Bank, China International Capital Corporation, CLSA, Bank of Communications, China Construction Bank (Asia), China Merchants Securities (HK), China Minsheng Banking Corp., Ltd., Hong Kong Branch, China PA Securities (Hong Kong) Company Limited, Citigroup, CMB International, Crédit Agricole CIB, Guosen Securities (HK), ICBC (Asia), J.P. Morgan and Mizuho Securities. The A&O deal team comprised partners Agnes Tsang and Jaclyn Yeap and lawyers Jiayin Yu, Erica Lo and Gordon Ng.

Involved fees earner: Erica Lo – Allen & Overy; Gordon Ng – Allen & Overy; Agnes Tsang – Allen & Overy; Jaclyn Yeap – Allen & Overy; Jiayin Yu – Allen & Overy; Lipton Li – Linklaters; William Liu – Linklaters; Michael Ng – Linklaters; Libin Shi – Linklaters; Allen Zhang – Linklaters;

Law Firms: Allen & Overy; Linklaters;

Clients: Bank of China; Bank of Communications; China Construction Bank Corp.; China International Capital Corporation Limited (CICC); China Merchants Securities ; China Minsheng Banking Corp.; China PA Securities (Hong Kong) Company Limited; Citigroup Inc.; CLSA; CMB International Capital Limited; Crédit Agricole Corporate and Investment Bank; Guosen Securities; ICBC (Asia); JP Morgan; Mizuho Securities; Shenzhen Municipal Government; Standard Chartered Bank;

Author: Giulia Di Palma