A Schengen bond is a

bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemica ...

denominated in offshore Renminbi, and more specifically refers to bonds listed on the

Luxembourg Stock Exchange The Luxembourg Stock Exchange, LuxSE (french: Bourse de Luxembourg) is based in Luxembourg City at 35A boulevard Joseph II. The chairman of the board is Alain Kinsch and the chief executive officer is Julie Becker. The exchange has pre-opening ...

and issued by a Chinese company.

Origin

On 8 May 2014,

Bank of China Limited The Bank of China (BOC; ) is a Chinese majority state-owned commercial bank headquartered in Beijing and the fourth largest bank in the world. The Bank of China was founded in 1912 by the Republican government as China's central bank, repl ...

, Luxembourg Branch, launched its first offshore-RMB “Schengen” bond, for an amount of RMB 1.5 billion. The transaction was done under the US$10 billion MTN programme of the Bank of China Group. With the support from international and local institutional investors, the issuance was around 2 times oversubscribed. It was priced at 3.50% for the 3-year bond. On 15 May 2014, it was listed on the Luxembourg Stock Exchange. This first offshore-RMB bond was originally named ‘Schengen’ bond due to the fact that ‘Schengen’ has a particular meaning in European countries. It is a reference to the name of a small village in Luxembourg that borders France and Germany where the

Schengen agreement The Schengen Agreement ( , ) is a treaty which led to the creation of Europe's Schengen Area, in which internal border checks have largely been abolished. It was signed on 14 June 1985, near the town of Schengen, Luxembourg, by five of the t ...

permitting the free movement of movement of persons within the Schengen area was signed. Additionally, the pronunciation of ‘Schengen’ in Chinese represents the meaning of “root here and develop here”.

Significance

Compared to

Dim sum bond Dim sum bonds are bonds issued outside of China but denominated in Chinese renminbi, rather than the local currency. They are named after dim sum, a popular style of cuisine in southern China. History and use The first dim sum bond was issued b ...

s, which were originally the offshore RMB bonds listed in Hong Kong and later came to refer to offshore RMB bonds listed elsewhere, Schengen bonds are the offshore RMB bonds listed in Europe, featuring a new trend of the internationalization of RMB and establishing a brand name for the RMB bonds in the Eurozone.

References

Bonds in foreign currencies Renminbi {{finance-stub

Origin

Significance

See also

References