Taiwan boosts position as offshore renminbi hub

Deutsche Bank becomes first foreign bank to raise renminbi in Taiwan.

Deutsche’s US$175 million Bao Dao bond comes less than four months after Taiwanese banks began accepting renminbi deposits.

It said this transaction reflects the strong demand for renminbi assets in Taiwan, and points to significant potential for the growth of this market. The bank is confident it will be the first of many international issuers that come to Taiwan seeking renminbi financing.

Deutsche printed a US$163 million three-year at 2.45% and a US$16 million five-year non-call one at 2.65%. Both tranches were priced near the high-ends of initial indications of 1.5%-2.5% for the three-year and 1.7%-2.7% for the five-year.

The levels, however, were cheaper than those that other issuers have achieved on recent deals in the more liquid Dim Sum market. Deutsche's success could embolden other foreign issuers to tap Taiwan for the arbitrage opportunities available from cheap renminbi funding.

The ability to raise cheaper renminbi from retail investors is one of the reasons that draw more foreign issuers to Taiwan and help the country become a more important centre for the currency.