China Construction Bank (Asia) joins common depository network
The international central securities depositories (ICSDs) Clearstream Banking S.A. and Euroclear Bank SA/NV have appointed China Construction Bank (Asia) Corporation Limited (CCB (Asia)) as common depository, safekeeper and service provider for their international debt securities, also known as Eurobonds.
The two ICSDs act jointly as the central hub of issuance and deposit for Eurobonds. They work with a number of large financial institutions acting as common depositories to support issuers across the globe. As a result, issuers benefit from greater investor reach by leveraging the ICSDs’ international client bases and multi-currency model. This international issuance model is supported by an interoperable link allowing clients to settle cross-border transactions seamlessly throughout the day, thereby increasing the liquidity available to market participants.
CCB (Asia)’s transaction banking specialises in all aspects of corporate trust, private trust, fund trust, loan agency, custody and fund administration businesses. The business offers comprehensive and customised agency and fiduciary solutions to support the full spectrum of capital market, asset management and fund industry transactions.
CCB (Asia) applied to, and successfully passed, the recent common depository qualification process and will be appointed as common depository, safe-keeper and service provider to support the ICSDs’ global Eurobonds issuance model. CCB (Asia) is expected to start its common depository service operations by mid-2020.
This geographic extension of the network demonstrates the attractiveness of the Eurobond model for Asia-Pacific (APAC) issuers. Leveraging Asian operations of common depositories facilitates primary market activities, including syndicated distributions, from the start of the business day in Asian markets allowing more efficient use of cash and securities. Likewise, it allows a closer connection to the APAC issuance and investor communities for a more efficient servicing of the securities throughout their life cycle.
Alan Lai, Head of Transaction Banking at China Construction Bank (Asia) commented: “CCB (Asia)’s aim is to broaden the Eurobond market to reach more APAC market participants – especially new issuers and investors from the People’s Republic of China. As a leading PRC bank, we are ideally placed to leverage our brand and network to better serve PRC market participants in the same language and time zone. We are honoured to be the first PRC bank appointed as common depositary and we look forward to a successful partnership with the ICSDs.”
Arnaud Delestienne, Head of Eurobonds Business at Clearstream, said: “The popularity of Eurobonds as a funding and investment vehicle has been growing constantly, not just in mature markets such as Europe and Northern America, but globally, reflecting increasing activity out of growth regions, such as APAC and Asia, Middle East and Africa. It has now become a cornerstone of global funding plans for Asian issuers, be it in USD, EUR or even local currencies. The appointment of China Construction Bank (Asia) reflects this growing demand, facilitating access to the international capital markets for Chinese issuers.”
Kathleen Holemans, Head of Network Management at Euroclear Bank, comments: “We are extremely pleased to be announcing with our colleagues at Clearstream the appointment of China Construction Bank (Asia) as common depository hub for our Eurobonds. The Eurobond market is attracting a wider investor base in Asia with an increased need for diversification and liquidity.”
About China Construction Bank (Asia) Corporation Limited
China Construction Bank (Asia) Corporation Limited (CCB (Asia)) is the comprehensive and integrated commercial banking business platform of China Construction Bank Corporation in Hong Kong. Currently, CCB (Asia) has over 50 outlets in Hong Kong and offers a wide array of banking products and services to customers, including consumer banking services, commercial banking services, corporate banking services, private banking services, treasury business and cross-border financial services, etc.
As an international central securities depository (ICSD), headquartered in Luxembourg, Clearstream, which is part of Deutsche Börse Group, provides the post-trade infrastructure for the Eurobond market and services for securities from 58 domestic markets worldwide. With around 14 trillion Euros in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities.
About Euroclear Bank
Euroclear Bank provides settlement and related securities services for cross-border transactions involving domestic and international bonds, equities, derivatives and investment funds. Serving major financial institutions located in more than 90 countries, Euroclear Bank, based in Brussels, is part of the Euroclear group. Euroclear Bank is rated AA+ by Fitch Ratings and AA by Standard & Poor’s.
As well as Euroclear Bank, the Euroclear group includes Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 837 trillion in securities transactions in 2019, representing 239 million domestic and cross-border transactions and held an average of EUR 30.1 trillion in assets for clients.