The bell-ringing ceremony, with (l. to r.) Longjian Chen (Bank of China), Robert Scharfe and Julie Becker (both LuxSE), and Hui Ou (BOC), 24 April 2019
Bank of China rang the bell at the Luxembourg Stock Exchange (LuxSE) on Wednesday to mark the official opening of its first Belt and Road Initiative-themed bond in the grand duchy.
The bond listing totals US$500m, and the occasion comes the same week global leaders are gathering in Beijing for the second forum dedicated to the Belt and Road Initiative, and just weeks after Luxembourg prime minister Xavier Bettel met with his Chinese counterpart, Li Keqiang, to sign a memorandum of understanding for cooperation on the BRI.
“All proceeds of the bond will be used to support funding projects along the belt and around the region,” Hui Ou, deputy general manager of the BOC Luxembourg branch, said during the ceremony, adding that there was a commitment on the bank’s part to balance “aspects of commercial profitability and social well-being”.
The custom gavels made for the occasion. Photo: Delano
The BRI, which links China with over 60 countries, has already seen investments of $90bn by Chinese entreprises, according to Bloomberg, with international investment expected to ramp up. “By investing in our bond,” said Ou, “we invite more international investors to participate in the BRI and global funding to the most needed area around this region.”
It’s a collaboration both the BOC and the LuxSE hope will grow. BOC has been what LuxSE CEO Robert Scharfe called a “frontrunner”: it was the first Chinese issuer on the LuxSE in 1986, and in 2014 it listed the Schengen bond, the first Chinese institution to have an offshore RMB bond listing in Europe. In 2016, BOC also launched its green bond in Luxembourg, the first Chinese bank to do so in continental Europe, with a total issue amount of $2.8bn.
Scharfe called BOC a “facilitator between the investor community and domestic stakeholders” and added that there are plans to expand the green bond channel and, although the number and type of securities would still have to be determined, LuxSE hoped to make international securities available as well to investors in China, e.g., via the Shanghai Stock Exchange.
Several Chinese domestic green bond indices have already been displayed through LuxSE in English so they are more accessible to international investors.
Scharfe added: “We’re awaiting the further opening of Chinese capital markets to facilitate flows in two directions.”
Ou agreed on the potential for collaboration, saying, “I’m fully convinced that if we can combine our efforts, we could leverage fully the unique position of Luxembourg…to create a long-lasting collaboration for us to grow, share and prosper.”