Bank of China Dubai Debuts 2 Billion Yuan Yulan Bond on Nasdaq Dubai

Bank of China Dubai rang the listing bell at Nasdaq Dubai on Tuesday for an offshore bond issued under the Yulan structure, the South China Morning Post reported. The issuance represents both the first offshore bond in the Middle East and North Africa to employ the Yulan framework and the maiden Yulan listing on Nasdaq Dubai.

Priced at 2 billion yuan (US$299.6 million) with a two-year tenor, the transaction tightened 50 basis points from initial price guidance. The final order book was more than five times oversubscribed, with sovereign accounts receiving over 30 per cent of the bond allocation.

Gu Weiyong, chief investment officer at Shanghai-based Ucon Investment Management, said the listing provides Middle Eastern investors holding renminbi with a new investment channel as part of Beijing's currency internationalisation push. Gu added that the transaction could encourage additional issuers across the region to tap renminbi financing.

Named after Shanghai's official flower and launched in late 2020, Yulan bonds are issued via the Shanghai Clearing House in partnership with Brussels-based Euroclear Bank. The mechanism permits Chinese offshore bonds denominated in Euroclear-eligible currencies to be settled across international clearing infrastructure without requiring foreign buyers to use China's onshore settlement system. Data from the Shanghai Clearing House showed cumulative Yulan bond issuance reached over 30 billion yuan as of July.

The Dubai debut follows an issuance on Monday by Shanghai Pudong Development Bank, which sold 1 billion yuan in Yulan bonds in Singapore to 31 domestic and overseas institutions, with foreign investors taking up 80 per cent of the book. Analyst Yu Lifeng of Beijing-based rating agency Dongfang Jincheng noted that diverging Chinese and US monetary policies have enhanced the funding-cost advantages of yuan debt. Separately, Fitch Ratings affirmed ratings for China's six major state-owned commercial banks on Tuesday.