Hong Kong RMB Bond Tender Sees 14x Oversubscription as Yuan Demand Surges
Darius Baruo Feb 05, 2026 10:20
HKMA's 2-year RMB government bond tender attracts RMB13.98 billion in bids for just RMB1 billion on offer, signaling strong institutional appetite for yuan assets.
Hong Kong's latest yuan-denominated government bond tender drew overwhelming demand from institutional investors, with applications hitting nearly 14 times the amount on offer—a clear signal that appetite for RMB-denominated sovereign debt remains robust despite relatively modest yields.
The Hong Kong Monetary Authority announced Wednesday that its re-opening of 2-year RMB institutional government bonds attracted RMB13.98 billion in bids for just RMB1 billion allotted. The 13.98 bid-to-cover ratio pushed the average accepted price to 100.20, translating to an annualized yield of 1.601%.
That yield sits well below the general Hong Kong 2-year government bond rate of 2.274% reported the same day, yet investors still piled in. Why the enthusiasm for lower returns?
Yuan Assets in Demand
The oversubscription comes as Beijing actively supports Hong Kong's role as an offshore yuan hub. China's central bank recently backed doubling the HKMA's yuan liquidity facility to 200 billion yuan, while authorities have signaled plans to issue more yuan sovereign bonds and explore government bond futures in the territory.
For institutional investors, these bonds offer direct exposure to RMB-denominated sovereign risk without onshore market access constraints. The Infrastructure Bond Programme, under which these securities are issued, provides a regulated pathway into yuan fixed income.
The Numbers
The bonds carry a 1.71% coupon rate, paid semi-annually, and mature November 17, 2027. Settlement occurs February 9, 2026. Notably, the average tender price of 100.04 (implying a 1.691% yield) sat below the final accepted price, meaning successful bidders were willing to accept tighter spreads than the broader applicant pool.
The pro-rata allocation ratio of approximately 84% at the lowest accepted price of 100.19 (1.607% yield) indicates competition remained fierce even at the margin.
What It Means
Strong demand for Hong Kong's RMB bonds suggests institutional confidence in yuan stability and continued interest in diversifying into Chinese currency exposure through regulated channels. With Hong Kong business confidence hitting a 2-year high according to recent surveys, the territory's bond market appears well-positioned to absorb additional issuance.
The HKMA also held a separate tender for 10-year RMB bonds on the same day—results that will provide further insight into the yield curve appetite among offshore yuan investors.
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