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BNY Mellon has launched its US Withholding Tax Administration service to assist US issuers faucet into Hong Kong’s offshore renminbi (Rmb) market by way of dim sum bond issuances, in accordance with a February 26 announcement.
Developed with the Central Moneymarkets Unit (CMU) of the Hong Kong Financial Authority (HKMA), the service is designed to permit US issuers to achieve entry to a wider pool of liquidity and profit from decrease funding prices in Hong Kong and mainland China whereas complying with US tax withholding necessities on US supply earnings paid to international individuals and entities.
The transfer might doubtlessly drive elevated issuance from US issuers, reasonably than mainland Chinese language issuers. Extra issuance from US issuers is anticipated to see an expanded vary of bonds accessible to institutional buyers in mainland China.
Hong Kong is the biggest offshore Rmb middle on the planet, with dim sum bond issuance reaching a file Rmb550 billion ($76.4 billion) in 2023, representing a 65% year-on-year improve, in accordance with the HKMA.
Fangfang Chen, BNY Mellon’s head of Asia Pacific, mentioned within the assertion: “As investor demand for Rmb-denominated alternatives continues to develop globally, this service resolved a key hurdle for US issuers in search of to profit from the brand new Bond Join scheme between Hong Kong and mainland China. Our work with the CMU additionally underscores our shared dedication to reinforce international capital markets connectivity.”
Stanley Chan, president, CMU on the HKMA, added: “We’re happy to collaborate with BNY Mellon to allow issuers to leverage the Bond Join scheme and Hong Kong’s monetary infrastructure to entry onshore and offshore Rmb capital.”
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