HSBC out of China dollar bond deal for first time since 2017

Hong Kong

HSBC Holdings was left off the list of banks arranging China's sovereign dollar debt sale for the first time since the nation returned with big annual deals in 2017.

Planned for this week, the US$6 billion sale will be arranged by 13 banks, including four Chinese lenders and foreign banks such as Bank of America, Citigroup and Standard Chartered, said people familiar with the matter who asked not to be named discussing a private information. The Ministry of Finance did not immediately respond to a fax seeking comment.

The reason for HSBC's omission was unclear, but the London-based lender's relationship with China has become increasingly fraught. The bank has been blasted by Chinese media for its role in the US investigation of Huawei Technologies and criticised for not coming out fast enough in support of Hong Kong's new security law.

Last month, the ruling Communist Party's Global Times newspaper reported that the bank, which counts Hong Kong as its biggest market, could be put on an "unreliable entity" list that aims to punish firms that damage China's national security.

A Hong Kong-based spokesperson for HSBC said the bank would not comment on any specific deals.

"As the leading foreign bank for G3 debt issuance in mainland China, HSBC is committed to supporting our clients and the opening up of China's capital markets," he said, adding "we have a good ongoing working relationship with" the Ministry of Finance.

China is key to HSBC chief executive officer Noel Quinn's plans to revive the lender's fortunes. Mr Quinn is, this year, hastening a shakeup of its global operations, pivoting further into Asia as its European operations lose money and it struggles with ballooning bad debt and low interest rates. The bank's shares hit a 25-year low last month in Hong Kong in part on concerns its plans to expand in China could be endangered.

HSBC has acted as one of the arrangers for China's dollar bond deals each year since China came back to that market in 2017, data compiled by Bloomberg showed.

Last year, it also helped arranged a sale of China's euro-denominated notes, the first such sale in 15 years. HSBC ranks second in the league table for offshore Chinese debt deals so far this year, showed Bloomberg-compiled data.

The lender has had other setbacks, losing out last year on a coveted spot in pricing a new Chinese benchmark rate and failing in a bid to get a licence to underwrite all types of company notes in the Chinese interbank bond market. BLOOMBERG