Accessing the Global Markets Through London London Stock Exchange Dim Sum Bonds

Transcription

1 Accessing the Global Markets Through London London Stock Exchange Dim Sum Bonds December 2016

2 LSE Group Depth and Breadth LSEG is a leading international open access financial market infrastructure group LSE plc sits within LSEG as the UK Recognised Investment Exchange business. Primary Markets Listing and Trading Cash Equities Derivatives London Stock Exchange Derivatives IDEX IDEM Fixed Income ORB OFIS MOT ExtraMOT Post Trade CC&G Monte Titoli GlobeSettle Information Services Unavista RNS SEDOL Real Time Data Technology Hosting and Connectivity X2M Business Services Academy Events &Studios 2

3 Heart of the World s Capital Markets Equities Debt ETFs 2, , , % Listed companies with aggregate market value of $7 trillion International companies with a combined market value of $3.7 trillion Debt securities listed on LSE Main Market. Overall money raised exceeds $4.8 trillion International government bonds from 34 different countries in 11 different currencies ETFs and ETPs listed in London from 24 issuers Growth in European ETF trading volumes in the past 5 years 11 $914bn $338bn+ 257bn 10 43% IPOs raising over $1bn in London in the last 3 years. Raised in last 10 years from Raised by sovereign, regional and local governments Total on-exchange turnover in 2015 RQFII ETFs listed on LSE since 2014 giving investors exposure to Chinese A-shares directly. Market share of European ETF trading 3

4 The London Proposition 4

5 # of Companies* % of ETF trading The London Proposition Snapshot Global Financial Centres Index 20 Top 10 Financial Centres by GFCI 20 rating More International Equity Listings Than Any Other Exchange Broad Capabilities Across Many Debt Markets and Currencies Euro US Dollar British Pound Swedish Krona Australian Dollar Norwegian Krone China Renminbi Japanese Yen Hong Kong Dollar Canadian Dollar Mexican Peso Other Other includes 32 different international currencies across 225 bonds, raising a combined 25.2bn Green Bonds Islamic Finance Dim Sum Bonds ORB Close to 50% trading of ETF in Europe is done in London High Yield Masala Bonds Convertible and Structured Debt Domestic International ,536 2,074 2, , LSEG NYSE NASDAQ SGX HKSE 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 LSE DB ENXT B.Italiana SIX Source : Factset, GFCI 20 5

6 Benefits of Listing in London Why consider a Listing on the LSE Access to the deepest pool of international capital in the world Quality of advisory community and sell-side research coverage Robust regulatory standards and efficient listing process Currency to fund business acquisitions & expand into new markets Competitive costs Broaden the shareholder base Global hub for innovative products (Green Bonds, RMB, Sukuk) Enhance profile & visibility - with customers & suppliers Access to a stable and loyal investor base Long term employee incentives 6

7 The Largest Investor Pool in the World $2 trillion invested in international equity out of London Equity AUM held in International Portfolios, by Metro Area (Q4 2015)* 1,987 Key Facts: London, more than any other financial centre, offers a long-standing globally oriented investor base UK assets under management totalled a record 6.8 trillion in 2014, the second largest in the world. The UK is also the leading European centre for management of hedge funds, sovereign wealth funds and private equity funds. 1,002 UK investors have diversified portfolios and are used to supporting companies international development Institutional investors in the other major listing venues tend to be more domestically focused Global investment portfolios ensure that investors appropriately value businesses with a global profile and aspirations 575 The UK accounts for 37% of global foreign exchange trading. More US dollars are traded in the UK than in the US. The UK is the leading derivative centre worldwide, accounting for 39% of trading in OTC interest-rate derivatives The UK has the leading share of trading in many international financial markets such as cross border bank lending (16%), international insurance premium income (29%) and foreign exchange trading (37%) London New York Oslo Toronto Paris Zurich Frankfurt Tokyo Amersterdam Stockholm HongKong Sydney Source: Facset and LSE calculation, 2016 *international portfolios defined as investment in companies with a domicile different to the country of domicile of the portfolio manager 7

8 Domestic Domestic Domestic Domestic Domestic Domestic ROW ROW ROW ROW ROW ROW A Truly Global Investor Base Global Investors Buy London-Listed Stocks - London remains the world s largest equity market, with more international assets under management than any other global financial centre. - Companies listing in London are able to access overseas investors through widely used and well understood capital raising routes. Domicile of Investors in Selected Exchange s Listed Securities Domicile of Investors in LSE-Listed Securities by Region 100% 90% 80% 51% UK 70% 60% 13% 50% Europe (ex UK) 40% 30% 30% North America 20% 10% 0% 6% Rest of World Source: Facset and London Stock Exchange calculation, July 2016 Domestic = Europe for Swiss SIX, XETRA and Euronext (Amsterdam, Paris, Brussels, Lisbon) Domestic = North America for NYSE, NASDAQ and Toronto ROW = rest of world 8

9 Raise Your International Profile London Global Hub for Investors Listing in a global market such as London raises a company s international profile. High international regulatory standards ensure access to a globally oriented investor base LSE is home to the deepest global foreign exchange centre. Selected Major Institutional Investors in London Listed Bonds LSE markets are supported by a network of 350 member firms from over 20 countries*, Americas Capital Research Vanguard SSgA Funds Fidelity Blackrock Thornburg Investment Artisan Partners Alliance Bernstein T. Rowe Price Caisse de dépôt et placement du Québec Itau Unibanco Brazil Europe Blackrock Legal & General Scottish Widows Invesco M&G Standard Life AXA Societe Generale Alecta Pension DWS Investment Swedbank Robur Allianz Global Investors BNP Paribas Union Investment Privatfonds GMBH Norges Bank Africa and Middle East QIA P.I.C South Africa Kuwait Investment Authority Investec CCB Islamic Bank Abu Dhabi Investment Authority Asia Pacific State Administration of Foreign Exchange (China) GIC BNY Mellon Hong Kong Blackrock Japan Mitsubishi UFJ Trust Sumitomo Mitsui Aberdeen Asset Management Asia Hang Seng Investment London trading hours GMT Source: Factset *LSEG, as of September

10 London Stock Exchange Capital Markets Days London Stock Exchange s Capital Markets Days facilitate face-to-face, scheduled dialogue between companies and institutional investors. This is usually done to highlight a specific region or sector focus. Format Market Opening: Unique opportunity for all companies, dignitaries and sponsors are invited to open London s market at 08:00 on the day of the event. This is filmed and can be accessed by international TV stations broadcasted in their relevant regions. A photographer is also present. Presentations: Welcome by a senior executive of the London Stock Exchange, giving an overview of the market/sector. Summary of the IPO process by top City advisors and investors. Each company will have an opportunity to explain its investment story meetings: Highly targeted individual meetings pre arranged by the Exchange. Each company has its own private meeting room the entire day which is fully equipped with all AV capabilities. Maximising exposure: Through the Exchange s press team from organisations such as the BBC, The Wall Street Journal, the Financial Times, CNBC & Sky News. Our central position within the London financial markets offers an unbiased arena in which to bring together select groups of companies with the most extensive possible network of appropriate potential investors. 10

11 After Referendum Business As Usual International Deals Continue As a result of the recent EU Referendum and subsequent Brexit vote, uncertainty about London s status as a financial centre has arisen. The international community has responded and shown their commitment to London via a number of high profile transaction announcements, thus proving London is open and ready for business India s HDFC Lists the First Masala Bond in London Japan s SoftBank Announces 24bn Takeover of UK s ARM Holdings GlaxoSmithKline invests 275m for Three New UK Manufacturing Sites On 21 st July, Housing Development Finance Corporation (HDFC) issued the world s first Masala bond issued by an Indian corporate The issue was 4.3 times oversubscribed and paves the way for the opening of the Masala bond market globally to support Indian company and infrastructure financing Distribution: 86% taken by Asian investors and 14% by European investors; Institutional investors made up 82% and private banks 18% This is a milestone transaction for HDFC. We have achieved our objective of attracting a global pool of capital to diversify our borrowing profile, The positive investor response towards this issuance reinforces the blue-chip positioning of HDFC, and establishes a significant benchmark for Indian companies said HDFC chairman Deepak Parekh. UK technology firm ARM Holdings is to be bought by Japan's Softbank for 24bn ARM Holdings designs microchips used in most smartphones, including Apple and Samsung models, and employs more than 3,000 people Softbank has previously acquired Vodafone's Japanese operations and the US telecoms company Sprint. The $20bn deal was the biggest foreign acquisition by a Japanese firm at the time The new deal will be funded by Softbank's own cash reserves and a long term loan from Japan's Mizuho Bank Masayoshi Son, chairman and chief executive of Softbank, said: "This is one of the most important acquisitions we have ever made, and I expect ARM to be a key pillar of SoftBank's growth strategy going forward Despite arguing against Brexit before the referendum, GSK believes the UK remains an attractive place for making medicines London currently accounts for nearly 50% of GSK s worldwide R&D and a third of it s manufacturing. The company recently announced plans to invest a further 275m into three drug manufacturing sites in Britain, signalling its confidence in the country despite last month's vote to leave the European Union "It is testament to our skilled UK workforce and the country s leading position in life sciences that we are making these investments in advanced manufacturing here," said Chief Executive Andrew Witty Business minister Greg Clark said GSK's move was a clear vote of confidence in Britain and demonstrated that "there really is no place better in Europe to grow a business" 11

12 London Stock Exchange s Fixed Income Offering 12

13 Global Home for Raising Fixed Income Capital 2570 Int l issuers.. The London Stock Exchange is the global financing hub for fixed income issuers from 59 countries in 39 currencies raising 3.5 trillion via 15,000+ Listed debt instruments Bond Primary and Secondary Market Statistics by Region 3% Issuance 97% 87% 13% Amount Outstanding 30% Trading 70% UK Rest of World % Of global secondary market bond trading takes place in London Source: TheCityUK estimates (2011) World Federation of Exchanges (2011) 13

14 Centre of Global Fixed Income Trading LSEG has developed highly liquid and transparent electronic fixed income order books that allow for both primary and secondary access and trading to international investors With changes to regulation including MiFID II and the associated pre- and posttrade transparency requirements, we anticipate that demand for credible secondary market platform trading for bonds will increase 5,500 Bonds Value Traded on Exchanges (USDm) 7, % CAGR ( ) 13,000 22,000 32, * Source: Bank for International Settlements; TheCityUK estimates (2011) World Federation of Exchanges (2011) * 2015 value estimated based on previous trend growth 14

15 Cutting Edge Financial Products Apart from standard issuance we are leading the way in new fixed income products Green Bonds Retail and wholesale markets, offering the choice of trade reporting, end-of-day pricing and continuous quoting Unique and comprehensive specialist offering for green bonds Dedicated green segments Industry Affiliations: ICMA GBP Observer, Social Stock Exchange, Climate Bonds Initiative, City of London Green Finance Initiative High Yield LSE s PSM accommodates all types of debt securities including high yield bonds in any denomination under a wholesale regime The PSM is a global listing venue attracting investment from many other locations in Europe, Asia, Latin America and Australia Islamic Finance LSE is a key global venue for the issuance of Sukuk There are over 20 banks in London providing Islamic financial services, more than any other European country Unique and comprehensive specialist offering for sukuk Dedicated sukuk fixed income segments Convertible and Structured Debt LSE s PSM accommodates all types of debt securities including convertible bonds in any denomination under a wholesale regime Many investors can only buy debt instruments listed on a Recognised Investment Exchange. LSE is well positioned to provide efficient and wellregulated markets for both bond issuers and investors Dim Sum Bonds LSE is a key global venue for the issuance of Dim Sum bonds Unique and comprehensive dedicated offering for Dim Sum bonds ORB LSE s flagship retail market - both primary issuance and secondary trading of retail denominated bonds Retail bonds can also be held in an ISA, which is a tax-free savings account Masala Bonds LSE is a key global venue for the issuance of Masala bonds Listing venue for the world s first Masala bond from an Indian corporate Unique and comprehensive dedicated offering for Masala bonds 15

16 A Choice of Debt Markets Applicable UK Listing Rules Financial Records Listing Documents Full prospectus Main Market Professional Securities Market Chapters 2 and 17 of UK Listing Rules Chapter 4 of UK Listing Rules At least two years trading records and independently audited accounts consistent with the International Financial Reporting Standards (IFRS) Transferability The debt securities subject to the listing must be freely transferable Local GAAP can be used No full prospectus required Listing Particulars adequate Issue Size The market capitalisation of the class of the debt securities to be listed must be at least 200,000 Listing of the Whole Debt Class All debt securities of the same class should be listed Designation Wholesale & Retail Bonds Wholesale Bonds only, although retail denominated bonds can be issued under the wholesale regime 16

17 Listing & Admissions Process 17

18 Smooth Listing Process UK debt markets high standards ensure credibility amongst the global investor base. The UK Listings Authority (UKLA) has a reputation for its a robust and balanced approach to implementing the listing rules whilst maintaining efficiency of the listing process. Listing process is a two pronged approach between LSE and UKLA Typical transaction timeline UKLA committed to efficient turn around times: Bond priced Up to 4 clear working days after first submission 2 clear working days** for subsequent submissions UKLA checklist can be used by issuers prior to submission One-off 2,000 UKLA Vetting fee is applied (no extra annual or application fees) London Listing Total transaction takes between three to eight weeks UKLA LSE Listing Application Four working days Application for Admission to Trading Initial review completed Two days** Up to one week Documentation Approved and Listing Granted Admission Granted Listing Effective Trading can Begin N.B. This process applies to plain vanilla debt securities, redemption-linked securities, medium term note programmes, securitised derivatives and supplementary prospectuses/listing particulars for non-equity securities. MTNs only require approval for the base prospectus with subsequent draw-down issues allowed at any time during 12 month period, subject to publication of Final Terms and Prospectus Supplement by 2pm the day before issuance **Only if required due to additional comments from he UKLA 18

19 Passporting a Prospectus Easy process to dual list in London via passporting (when the bond prospectus is already approved in another EEA jurisdiction) Passporting involves a prospectus approved by the issuer's Home Competent authority in the EEA being accepted by another EEA member state as the basis of a public offer or admission of securities to a regulated market. In this way, issuers with bonds listed elsewhere can gain a London listing quickly and efficiently. For existing notes to be admitted to trading on the regulated market of the London Stock Exchange, the issuer would have to undertake the following steps Step 1 Step 2 Step 3 Action Obtain a passport from the existing EEA Competent Authority by submitting a Notification Request Form. Submit the security to the UKLA Official List alongside the passport and make some small additions to the document, for example confirm the planned listing on London Stock Exchange in the prospectus. Apply to the London Stock Exchange for admission to trading. This involves submitting a completed Form 1 1 and an electronic copy of the relevant prospectus. Comment The existing EEA Competent Authority has three working days to notify the UKLA that it has approved the base prospectus. Once this has occurred, the issuer can contact the UKLA to apply for the notes to be listed in the UK. For new notes to be issued under the existing programme to be admitted to trading on the regulated market of the London Stock Exchange, the issuer would have to undertake the following steps: Step 1 Step 2 Step 3 Action Send a notification request form in relation to the base prospectus to the existing EEA Competent Authority, who will inform the UKLA Send an application for admission of securities form and a listing rules checklist to the UKLA 2. Apply to the London Stock Exchange for admission to trading. This involves submitting a completed Form 1 1 and an electronic copy of the relevant prospectus. Comment If this has already been done for previous admission, there is no need to do it a second time. Note that the application for admission of securities form has to be sent for each new series of notes, the listing rules checklist only needs to be sent the first time an issuer is applying to the official list of the UKLA. Ensure that the relevant final term specifies, that the notes will be admitted to trading in London. That is the only drafting difference. 1 Form 1: 2 UKLA Checklist: 19

20 Admission Process For admission, the documents that we need are 1 : Signed Form 1 with EU sanctions complete Signed Board Minutes Prospectus UKLA approved letter Confirmation of the note being issued (usually the day before) Also as soon as possible in the admission process, it is necessary to arrange for the creation of the relevant trading codes: ISIN/SEDOL ISINs are normally allocated by the country of domicile of the issuer. London Stock Exchange is then responsible for allocating a SEDOL code, which is a unique instrument identifier. the Pricing Supplement(s) to smfnewissues@lseg.com and allow 48 hours for these to be assigned. TIDM A Tradable Instrument Display Mnemonic (TIDM) is the three or four character identifier specific to London Stock Exchange. Issuers may request a specific TIDM, which will be issued, provided it is not already in use or reserved. Once reserved, these are held for a period of six months. Requests should be made to the Admissions Team by ing the issuer name and the instrument name, making it clear that it is a TIDM request, to admissions@lseg.com 1 Note that these documents can initially be in draft form (i.e Form 1 not signed and prospectus not yet approved but it will need to be a workable document (i.e have most of the key information included)). All final documentation needs to be with LSE Admissions by 4pm the day before admission. 20

21 International Cost Competitiveness Competitive Fee Structure: LSE fees are calculated on a sliding scale, based on issue size and type of issue. No fee is payable for setting up an MTN program. No annual fee is payable in respect of debt securities on the London Stock Exchange s markets Greater than or equal to Eurobonds & International Issuers Face Value ( m) Fee ( ) Less than , , and above 4,200 Greater than or equal to Issuers under debt issuance programs Face Value ( m) Fee ( ) Less than , , , above 3,650 21

22 Dim Sum Bonds 22

23 : Highlights from a Golden Era China Development Bank bond launch, 20 October 2015 CBK CCBI ETF, 25 March 2015, Xavier Rolet, Hu Zhanghong, Andrea Leadsom, Minister Counsellor Jin Xu CSRC delegation led by Vice Chairman Fang visit LSE, 15 February 2016 ICBC report launch and B20 Conference, 23 March 2016 Nikhil Rathi, CEO LSE plc meets President Xi Jinping, 21 October 2015 Harriett Baldwin, Economic Secretary to HM Treasury, Xavier Rolet, Mr Liu, Former Chairman of ABC and Minister Counsellor Jin Xu celebrate ABC RMB green bond 22 October 2015 Bank of China s Mr Gao EVP and Xavier Rolet, CEO LSEG sign MoU, 22 October 2015 Assistant Governor to People s Bank of China Zhang Xiaohui and LSEG-PBoC China Green Bond Conference, 23 October

24 LSE & Chinese Financial Market 42 Chinese companies on LSE, with a market capitalisation of over $116 billion 10 RQFII ETFs giving exposure to China s equity and fixed income markets 100 RMB bond listings, of which 65 came to LSE only this year, including the landmark listing of RMB 3 billion Chinese sovereign bond, the first to be issued outside of China Global Centre for Capital Formation Deep Pool of Liquidity Every day, around 4.8 billion equities and 1.34 billion ETFs are transacted on LSE 8 member firms from Greater China latest addition last September is CCB London Track Record of Green Finance Leading Global Index Provider More than $10.8 trillion is currently benchmarked to FTSE Russell indexes 40 green bonds raising over $10.5 billion October 2015, Agriculture Bank of China issued 1st RMB green bond for Chinese entity at LSE By May 2016, the three Hong Konglisted ETFs on FTSE China A50 Index accounted for 73.4% of all A-Share ETFs AUM, and 82.5% of average daily turnover of all HK listed ETFs In June, FTSE Russell launched a ground breaking Green Revenues model covering over 13,000 globally listed companies 24

25 Dim Sum Bonds on London Stock Exchange 100 Dim Sum bonds raising RMB 38.4bn across 20+ international issuers An increased primary market activity has characterized 2016 with 65 dim sum bonds listing in London (RMB billion ($2.4 billion equiv.)) by non Chinese entities from across the world. Key transactions include: first RMB bond by Hungary first Chinese sovereign RMB bond issued outside of China Choosing London as the destination to issue the first Chinese sovereign RMB bond outside of China reinforces the UK s strong economic and financial relationship with China Chancellor of the Exchequer, George Osborne Source: 26 May 2016 Press Release, 25

26 Dim Sum Bonds Key Milestones Development of the Dim Sum bond market has made dramatic progress in recent years with a number of landmark issuances coming to London June 2010 LSE s First RMB denominated bond January 2014 Largest RMB bond Issue March 2015 First Chinese Money Market ETF July 2015 Europe s first China sovereign bond ETF October 2015 Short-term central bank notes April 2016 First sovereign RMB bond in Continental Europe June 2014 First Green Dim Sum bond April 2015 ishares MSCI China A UCITS ETF October 2015 First offshore RMB bond December 2015 First bond on LSE under $10bn MTN May 2012 ORB s First RMB retail denominated bond October 2014 First non-chinese sovereign offshore RMB bond July 2015 First Euro denominated bond October 2015 First Green RMB bond for ABC June 2016 First Chinese sovereign offshore RMB bond London s success in building its position as the leading western hub for RMB reflects the UK s continued ability to innovate and lead in new financial markets 1 Source: Chancellor of the Exchequer, George Osborne, 26 May 2016 Press Release, 26

27 Dim Sum Bond Case Studies 27

28 Recent Dim Sum Issuance Hungarian Government Agricultural Bank of China China Construction Bank China Development Bank UK Government IFC Issue Date 25 April Oct Oct Oct Oct Jun 2014 Transaction Details Issue Size RMB 1bn Coupon 6.25% USD400mn / USD500mn / RMB 600mn 2.125% / 2.75% / 4.15% RMB 1bn USD1.0bn / EUR 500mn RMB 3 bn RMB 500mn 4.3% 2.6% / 0.875% 2.7% 2.00% Maturity 3 year 3 year / 5 year / 2 year 2 year 5 year / 3 year 3 year 3 year Issuer Profile Rating BB+ / Ba1 / BB+ A1 / A A1/A Aa3 / AA- AAA / AA+ / Aa1 AAA / Aaa 28

29 Hungary becomes the first country from Continental Europe to issue an RMB denominated sovereign bond Geographical Distribution Asia 72% Country Rating Country Summary Hungary BB+ / Ba1 / BB+ Transaction Details Issue Date 25 Apr 2016 Issue Size RMB 1 billion Europe 28% Other Europe 8% GDP Market USD 265 billion Main Market Coupon 6.25% Maturity 3 years Middle East & Africa 1% Others 2% Country profile Debt issuance story In April 2016, the Hungarian Government issued a 6.25%, three year bond that raised RMB 1 billion. We believe RMB is going to be an international currency, and play a key role in the global capital market in the coming years. Our strategy is to get into the RMB market now and establish a long term relationship with the Chinese regulators and investors. From a public debt management perspective, we would like to have more diversification in our portfolio, both in currencies and products. Hungary became the first country in Continental Europe to issue a renminbi-denominated sovereign bond. The issuance proceeds will be used for general purposes. The bond was at least 2.5 times oversubscribed. Sole Lead: Bank of China. Distribution by Investor Banks 45% Asset Managers 39% Private Banks 11% Insurers 5% 29

30 Using Green offshore dual currency bond issuance to finance green projects Company Rating Sector Market Company Details Agricultural Bank of China A1/A Financials PSM Company profile Transaction Details Issue Date 20 Oct 2015 Issue Size $400 million / $500 million / RMB 600 million Yield at issue 2.125% / 2.75% / 4.15% Maturity 3 years / 5 years / 2 years Debt issuance story Agricultural Bank of China is one of the top four commercial banks in China. ABC is one of the first standing members of the green finance committee of China Society for Finance and Banking. In 2013, ABC signed the green credit commitment along with other financial institutions, and formulated green credit standards and protocols. The successful issuance and listing of ABC s green bonds on the London Stock Exchange not only fulfils our ambition that was announced as part of the policy outcomes of the latest UK-China Economic and Financial Dialogue, but also manifests the close and fruitful cooperation between Chinese and UK financial institutions on green finance, climate change and adaption initiatives. Based on the green bond management framework, the proceeds from the offering will support renewable energy, energy efficiency, sustainable waste management, sustainable use of land, clean transportation and sustainable water management. The listing is the first international Green Bond issue by a Chinese bank, as well as the first listed Green RMB bond for ABC on the London Stock Exchange. Joint Leads: ABC, BAML, Barclays, GS HSBC, JPM, MS, SCB, Wells Fargo. 30

31 China Construction Bank becomes the first bank from mainland China to issue a dim-sum bond Company Rating Sector Market Company Details China Construction Bank A1/A Financials Main Market Transaction Details Issue Date 20 Oct 2015 Issue Size RMB 1 billion Yield at issue 4.3% Maturity 2 years Company profile Debt issuance story CCBC is a leading commercial bank in China providing a comprehensive range of commercial banking products and services. We are among the market leaders in China in a number of products and services, including infrastructure loans, residential mortgage and bank cards. "We are delighted to witness the listing of CCB's off-shore RMB bond on the London Stock Exchange and to confirm that CCB London Branch has become a member of the Exchange. We look forward to ongoing collaboration with the LSE to make further contributions to the internationalisation of the RMB." Proceeds from the offering will support general corporate purposes and ahead of a state visit by Chinese President Xi Jinping to Britain. China Construction Bank RMB 1 billion bond is the first CCBC off-shore RMB Bond in the London market. in a move to provide more investment products to European investors and speed the internationalisation of the currency. Joint Leads: CCB International Capital, Hong Kong & Shanghai Banking Corp, Standard Chartered Bank (Hong Kong), UBS Hong Kong. 31

32 China Development Bank issues 1.56bn dual-currency bond to finance project investments in Europe Company Rating Sector Market Company Details China Development Bank Aa3/AA- Financials PSM Transaction Details Issue Date 12 Oct 2015 Issue Size USD 1billion / EUR 500 million Yield at issue 2.6% / 0.875% Maturity 5 years / 3 years Company profile Debt issuance story China Development Bank (CDB) is one of the largest development financial institutions in the world and the major bank that provides medium and long term financing and investment services in China and in promoting development elsewhere in the world. As at the end of the 3rd Quarter of 2015, CDB s total assets reached RMB11.4 trillion and ranked No. 87 among Global Fortune 500. Mr. Hu Huaibang, Chairman of CDB said that CDB recognised London as a key global financial centre. He believes that London's depth of financial activities, vigour and comprehensive infrastructure will create a conductive environment for deeper corporation between China and the UK. The proceeds for this transaction are primarily to be used to support project investments in Europe. This transaction extends from the UK-China Financial Dialogues, and marks the latest achievement of deeper cooperation between the two countries. In February 2016, CDB was the first Chinese issuer to execute a euro-denominated deal by tapping it is existing 500m and 1bn tranches and pushing the total amount raised to 2.1 bn. Joint Leads: Bank of China, BOCOM Hong Kong, BNP Paribas, HSBC, JPMorgan Securities, Standard Chartered. 32

33 The UK Government becomes the non-chinese western country to issue a bond in RMB Company Rating GDP Market Country Summary United Kingdom AA / Aa1 USD 2.6 Trillion Main Market Transaction Details Issue Date 21 Oct 2014 Issue Size RMB 3 billion Yield at issue 2.7% Maturity 3 years Country profile Debt issuance story In October 2014, the UK Government issued a 2.7%, three year bond that raised RMB 3 billion. The bond has been used to add to Britain s foreign currency reserves and is a sign of the two countries deepening ties. The UK government s sovereign renminbi bond issue, the first by a Western country, has been a great success and will deliver value for money to tax payers. Our long term economic plan is working, but the job isn t done. We need to export to fast growing economies like China, and attract more investment to our shores. The proceeds will be used to finance the UK s reserves which are held in the government s Exchange Equalisation Account, which include financial assets denominated in foreign currencies, gold and International Monetary Fund Special Drawing Rights. It is the first ever non-chinese issuance of sovereign RMB debt and the largest ever non- Chinese RMB bond issued on the London Stock Exchange. Joint Leads: Bank of China, HSBC Bank, Standard Shattered. 33

34 Using Green offshore renminbi bond issuance to finance Chinese climate-friendly investments Company Rating Sector Company Details International Finance Corporation (part of World Bank Group) AAA/Aaa Supranational Transaction Details Issue Date 17 Jun 2014 Issue Size RMB 500 million Yield at issue 2.00% Market Main Market Maturity 3 years Company profile Debt issuance story IFC is one of the world s largest financiers of climate-smart projects for developing countries, investing about $11 billion in long-term financing over the last decade for renewable power, energy efficiency, sustainable agriculture, green buildings and private sector adaptation to climate change. IFC is committed to supporting the development of China s capital markets, which are key to creating access to finance for the private sector and especially small and medium businesses. We will continue to seek opportunities to help deepen liquidity and extend the yield curve for offshore renminbi assets. The addition of the renminbi as a new green bond currency also supports our goals to strengthen this important asset class. Proceeds from the offering to support projects to reduce greenhouse gas emissions for example, by rehabilitating power plants and transmission facilities, installing solar and wind power, and providing financing for technology that helps generate and use energy more efficiently. In March 2014, IFC became the first multilateral institution to list renminbi-denominated bonds on LSE, raising 2 billion renminbi from international investors. IFC was also the first to set up a program to regularly issue offshore renminbidenominated discount notes. Sole arranger: HSBC. Source: IFC press release, LSEG database, June

35 Appendix (general slides) 35

36 Main Market Criteria Security type Official list status Regulated Sponsor / Nomad Corporate governance Regulatory supervision Legislation Types of companies Premise Eligible investors Main Market Fixed Income Listed EU Regulated Not Required A Code UKLA LR/PD/TD/MAR/A&Ds Large multinationals Debt issuers seeking high profile listing Professional and retail Description Flagship Market: The London Stock Exchange s Main Market is the world s most international market for the admission and trading of equity, debt and other securities, providing access to Europe s deepest capital pool Located at the heart of the world s leading financial centre: The ideal home to over 2,600 debt issuers from 60 countries, including many of the world s largest, most successful and most dynamic companies High Profile Listing: Exposes debt securities to a wide audience of financial market participants, boosting the profile of the listing High regulatory standards: Underpinned by London s balanced and globally-respected standards of regulation and corporate governance, the Main Market represents a badge of quality for every company admitted to and traded on it and an aspiration for many companies worldwide Broad range of eligible investors: The Main Market s status as a listed and regulated market offers flexibility both to issuers and holders of debt finance. Its focus, therefore, is on the broadest range of institutional and retail investors Liquidity: Offers a number of secondary market order-book solutions while providing access to London s deep pool of international eurobond liquidity Cost saving: Offers cost savings as London is the only major European listing venue with no annual fees to debt issuers 36

37 Professional Securities Market Criteria Security type Official list status Regulated Sponsor / Nomad Corporate governance Regulatory supervision Legislation Types of companies Premise Eligible investors PSM Fixed Income Listed MTF Not Required Domestic UKLA LR/LP/MAR/A&Ds Emerging Markets Debt issuers using local GAAP Professional only Description Lighter Regulation: Outside scope of EU Prospectus and Transparency Directives No EU Passport: Designed to meet financing needs of issuers who do not require EU passport Alternative Accounting Standards: Offers alternative for issuers not wishing to prepare financial information to IFRS, and ability to report under national GAAP Lower Denomination requirements: Distinction between wholesale and retail does not apply, which allows securities to be issued in denominations lower than 100K but under the wholesale regime Lower disclosure requirements: Offers full listed status but with lower levels of disclosure and continuing obligations than what would be required on EU- Regulated Main Market Liquidity: Offers a number of secondary market order-book solutions while providing access to London s deep pool of international eurobond liquidity Cost saving: Offers cost savings as London is the only major European listing venue with no annual fees to debt issuers 37

38 UKLA Listing Requirements Checklist LR 2 Required by LR Rule Description (1) Applicant Duly incorporated The applicant must be validly established according to the relevant laws of its place (2) Conformity with constitution The applicant must be operating in conformity with its constitution (1) Conforms with law of place of constitution Securities must conform with the law of the applicant s place (2) Duly authorised Securities must be authorised according to the applicant s constitution (3) Statutory and other consents Securities must have necessary statutory or other consent Admitted on Recognised Investment Exchange (RIE) Securities must be admitted to trading on a RIE market for listed securities (1) Freely transferable The listed securities must be freely transferable (1) Minimum market capitalisation The expected aggregate amount value of the securities must be at least 200, (1) Whole class to be listed If no securities of that class are already listed, the new securities class must relate to all securities of that class issued or proposed to be issued (2)(a) Prospectus approved by FCA and published A prospectus must be approved by the FCA (2)(b) Other EEA is Home Member State for the securities The relevant competent authority must supply the FCA with a certificate of approval, a copy of the prospectus as approved and a translation of the summary of the prospectus (2) Listing Particulars approved Listing particulars for the securities must have been approved by the FCA (1) Convertible into listed securities (2) Convertible into recognised market securities Convertible securities may be admitted to listing only if the securities into which they are convertible are listed securities Convertible securities may be admitted to listing only if the securities into which they are convertible are securities listed on a regulated, regularly operating, recognised open market Source: UKLA website 38

39 Ongoing Obligations of Debt Issuers Relevant legislation and rules London Stock Exchange s Regulated Market (Main Market) EEA Regulated Disclosure and Transparency Rules (DTR) Listing Rules (LR) The Professional Securities (PSM) (Unregulated Market) Exchange Regulated Disclosure and Transparency Rules (DTR) Listing Rules (LR) Accounts Wholesale The PSM does not distinguish between wholesale and retail issuers. Issuers with debt securities in denominations of EUR100,000 (or equivalent) and above do not have to comply with the periodic financial requirements set out in the Transparency Directive (implemented by DTR 4). However, under LR , annual report and accounts must be approved and published within six months of the year end, and must be independently audited and prepared in accordance with the issuer s national accounting standards or IAS. LR requires Issuers to publish their annual report and accounts. These must be approved and published within six months of the year end, and must be independently audited and prepared in accordance with the issuer s national accounting standards or IAS. No requirement to produce half-yearly reports. No requirement to produce half-yearly reports. Retail Annual reports must be prepared and published within four months of the year end and to be publicly available for at least five years (DTR and 4.1.4). Half-yearly reports must be prepared and published within two months of the period to which it relates and to be publicly available for at least five years (DTR 4.2.2). Inside Information If there is any inside information that directly concerns the issuer, the issuer must disclose such information as soon as possible through a Regulated Information Service (RIS) to the market (DTR 2.2). Issuers are required to comply with DTR 2, which details with disclosure and control of information by issuers, in the same way as an issuer with securities admitted to trading on a Regulated Market (LR ). The issuer, and those acting for it must prepare and keep up-to-date lists of individuals working for them with access to inside information. The insider list must name each insider, state the reasons for the insider s inclusion on the list, and include the date of creation and update the list (DTR 2.8). If there is any inside information that directly concerns the issuer, the issuer must disclose such information as soon as possible through a RIS to the market (DTR 2.2) The issuer, and those acting for it must prepare and keep up-to-date lists of individuals working for them with access to inside information. The insider list must name each insider, state the reasons for the insider s inclusion on the list, and include the date of creation and update the list (DTR 2.8). 39

40 Ongoing Obligations of Debt Issuers (cont d) Dissemination of Information London Stock Exchange s Regulated Market (Main Market) EEA Regulated The issuer is required to comply with DTR 6.3, which dictates how information should be disseminated to the market. Information required to be disclosed under the DTRs must fall within the definition of regulated information. Regulated information must be disseminated to as wide a public as possible and simultaneously in the Home Member State and other EEA states. In effect, this rule obliges an issuer to make use of a RIS and adhere to other minimum requirements when disclosing, for example, inside information. An annual report is not required to be communicated to the media in full unedited text unless it is the type that would be required to be disseminated in half-yearly financial report. The Professional Securities (PSM) (Unregulated Market) Exchange Regulated Under LR B, the issuer is required to comply with DTR 6.3, which dictates how much information should be disseminated to the market. Information required to be disclosured under the DTRs must fall within the definition of regulated information. Regulated Information must be disseminated to as wide a public as possible and simultaneously in the Home Member State and other EEA states. In effect, this rule obliges an issuer to make use of a RIS and adhere to other minimum requirements when disclosing, for example, inside information. Other relevant continuing obligations Ensure equal treatment for all holders of the debt securities ranking pari passu in respect of all rights attaching to the debt securities (DTR 6.1.3). Make public without delay any change in the rights of holders of the debt securities including changes in the terms and conditions of the debt securities which could indirectly affect those rights, resulting in particular from a change in loan terms or in interest rates (DTR ). All holders of debt securities must be given equal treatment in respect of rights. Any changes to the rights must be disclosed to the public without delay. Publish notices/distribute circulars concerning bondholder meetings, payment of interest, exercise of conversion, exchange, subscription or cancellation rights and repayment (DTR ). Make public without delay any new loan issues and in particular of any guarantee or security in respect thereof (DTR ). Ensure that all the necessary facilities and information are available publicly to enable holders of the debt securities to exercise their rights (DTR 6.1.4). Where the issuer proposes to amend its instrument of incorporation or statutes, it shall provide the draft amendment to the FSA. Such submission shall be effected without delay and must, at the latest, be provided on the date of the general meeting called on to vote on, or be informed of, the amendment (DTR 6.1.2). 40

41 Appendix (data sets) 41

42 RMB Bond Issuance in London ISIN Issuer Name Security Name Coupon (%) Amount Issued (CNY) Issue Date Maturity Segment XS Commonwealth Bank of Australia CBAAU /07/ ,000,000 07/12/ /12/2021 Main Market XS Commonwealth Bank of Australia CBAAU /29/ ,000,000 29/11/ /11/2019 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /23/ ,000,000 23/11/ /11/2021 Main Market XS QNB Finance Ltd QNBK /18/ ,000,000 18/11/ /11/2019 Main Market XS QNB Finance Ltd QNBK /17/ ,000,000 17/11/ /11/2019 Main Market XS Commonwealth Bank of Australia CBAAU /02/ ,000,000 02/11/ /11/2021 Main Market XS Commonwealth Bank of Australia CBAAU /10/ ,000,000 09/09/ /12/2018 Main Market XS QNB Finance Ltd QNBK /06/ ,000,000 06/09/ /09/2017 Main Market XS Commonwealth Bank of Australia CBAAU /27/ ,000,000 27/07/ /07/2020 Main Market XS Credit Agricole SA ACAFP 4 07/22/ ,000,000 22/07/ /07/2019 Main Market XS QNB Finance Ltd QNBK /21/ ,000,000 21/07/ /07/2019 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /28/ ,000,000 28/06/ /06/2018 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /08/ ,000,000 08/06/ /06/2018 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /08/ ,000,000 08/06/ /06/2019 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /07/ ,000,000 07/06/ /06/2019 Main Market XS First Gulf Bank PJSC FGBUH /03/ ,000,000 03/06/ /06/2019 Main Market XS China Government Bond CGB /02/ ,000,000,000 02/06/ /06/2019 PSM XS Commonwealth Bank of Australia CBAAU /02/ ,000,000 02/06/ /06/2018 Main Market XS Commonwealth Bank of Australia CBAAU /02/ ,000,000 02/06/ /06/2018 Main Market 42

43 RMB Bond Issuance in London ISIN Issuer Name Security Name Coupon (%) Amount Issued (CNY) Issue Date Maturity Segment XS Australia & New Zealand Banking Group Ltd ANZ /01/ ,000,000 01/06/ /06/2018 Main Market XS Lloyds Bank PLC LLOYDS 4 ¼ 05/31/ ,000,000 31/05/ /05/2018 Main Market XS Commonwealth Bank of Australia CBAAU /27/ ,000,000 27/05/ /05/2018 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /27/ ,000,000 27/05/ /05/2019 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /27/ ,000,000 27/05/ /05/2019 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /27/ ,000,000 27/05/ /05/2018 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /24/ ,000,000 24/05/ /05/2019 Main Market XS Standard Chartered Bank STANLN /23/ ,000,000 23/05/ /05/2018 Main Market XS Commonwealth Bank of Australia CBAAU /23/ ,000,000 23/05/ /05/2018 Main Market XS First Gulf Bank PJSC FGBUH /13/ ,000,000 12/05/ /05/2019 Main Market XS Westpac Banking Corp WSTP /12/ ,000,000 12/05/ /05/2021 Main Market XS Standard Chartered Bank STANLN 4 ¼ 05/09/ ,000,000 09/05/ /05/2018 Main Market XS Royal Bank of Canada RY 4 05/06/ ,000,000 06/05/ /05/2019 Main Market XS Commonwealth Bank of Australia CBAAU 4 05/03/ ,000,000 03/05/ /05/2018 Main Market XS Royal Bank of Canada/Toronto RY /29/ ,000,000 29/04/ /04/2019 Main Market XS Commonwealth Bank of Australia CBAAU /28/ ,000,000 28/04/ /04/2019 Main Market XS Hungary Government International Bond REPHUN 6 ¼ 04/25/ ,000,000,000 25/04/ /04/2019 Main Market XS Commonwealth Bank of Australia CBAAU 4 ¼ 04/21/ ,000,000 21/04/ /04/2019 Main Market XS Royal Bank of Canada RY /21/ ,000,000 21/04/ /04/2019 Main Market 43

44 RMB Bond Issuance in London ISIN Issuer Name Security Name Coupon (%) Amount Issued (CNY) Issue Date Maturity Segment XS QNB Finance Ltd QNBK /20/ ,000,000 20/04/ /04/2018 Main Market XS Westpac Banking Corp WSTP /20/ ,000,000 20/04/ /04/2020 Main Market XS Commonwealth Bank of Australia CBAAU /19/ ,000,000 19/04/ /04/2019 Main Market XS Standard Chartered Bank STANLN /15/ ,000,000 15/04/ /04/2019 Main Market XS Standard Chartered Bank STANLN /15/ ,000,000 15/04/ /04/2019 Main Market XS Westpac Banking Corp WSTP /29/ ,000,000 29/03/ /03/2019 Main Market XS Westpac Banking Corp WSTP 4 ¾ 03/22/ ,000,000 22/03/ /03/2019 Main Market XS Commonwealth Bank of Australia CBAAU /21/ ,000,000 21/03/ /03/2019 Main Market XS Royal Bank of Canada RY 5 03/18/ ,000,000 18/03/ /03/2019 Main Market XS Westpac Banking Corp WSTP /18/ ,000,000 18/03/ /03/2019 Main Market XS National Bank of Abu Dhabi PJSC NBADUH 4 ¾ 03/15/ ,000,000 15/03/ /03/2019 Main Market XS Commonwealth Bank of Australia CBAAU /14/ ,000,000 14/03/ /03/2019 Main Market XS Royal Bank of Canada RY /11/ ,000,000 11/03/ /03/2019 Main Market XS Commonwealth Bank of Australia CBAAU /11/ ,000,000 11/03/ /03/2019 Main Market XS Commonwealth Bank of Australia CBAAU /10/ ,000,000 10/03/ /03/2019 Main Market XS Commonwealth Bank of Australia CBAAU /07/ ,000,000 07/03/ /03/2021 Main Market XS Royal Bank of Canada RY /04/ ,000,000 04/03/ /03/2019 Main Market XS Commonwealth Bank of Australia CBAAU /04/ ,000,000 04/03/ /03/2019 Main Market XS Australia & New Zealand Banking Group Ltd ANZ /05/ ,000,000 03/03/ /03/2018 Main Market 44