Deutsche Bank wins nod to underwrite corporate bonds in China

[HONG KONG] Deutsche Bank AG became the latest foreign bank to be allowed to underwrite China's corporate bonds as the government opens up the onshore debt market.

The German bank has received approval from the National Association of Financial Market Institutional Investors, or NAFMII, to underwrite corporate bonds sold by both onshore and offshore issuers in the interbank market, it said in a statement. A year ago, China started allowing overseas investors to invest via Hong Kong through the bond-connect program in the bigger of China's two debt markets.

"The ability to help offshore and onshore clients issue primary debt in China provides an important additional facet to our full suite of capabilities" in the country's fixed-income market, Werner Steinmueller, Deutsche Bank Asia Pacific Chief Executive Officer, said in the release.

China has accelerated the opening of the world's third-biggest debt market to help stem capital outflows and promote greater use of the yuan. Higher bond yields onshore are attracting foreign investors who boosted their China onshore bond holdings by 162 billion yuan (S$33 billion) in the first quarter to a record high of 1.36 trillion yuan.

Deutsche Bank said it expects yuan-denominated bond investment flows to reach as much as 5.3 trillion yuan over the next five years, according to the press release.

Citigroup Inc, BNP Paribas SA, HSBC Holdings Plc, JPMorgan Chase & Co and Standard Chartered Plc are also corporate bond underwriters in China's interbank market.

Deutsche Bank is already licensed in China as a market maker on the interbank market and the bond connect program, and as a bond settlement agent, it said in the press release.

BLOOMBERG