About 1.6 billion yuan (S$330m) worth of transactions were cleared in Singapore on Monday, when the Industrial and Commercial Bank of China (ICBC) Singapore unit officially launched its yuan clearing services.

The transactions include trade-related remittances and foreign exchange trade.

Twenty-three out of 49 participating banks used the clearing service on Monday.

And racing to stamp their names on the offshore yuan bond market, HSBC and Standard Chartered timed their bond offerings to take advantage of the start of yuan clearing in Singapore.

The bond sales were snapped up by institutional and private bank investors, raising a combined 1.5 billion yuan (S$310m). There was no retail allocation.

HSBC Singapore's head of commercial banking, Mr Kelvin Tan, said: "As the offshore RMB liquidity pool expands, and you have more market participants and investors in the pool, I think there will be significant interest in this product. People who then start trading and settling in RMB will also need RMB and they wouldn't mind issuing an RMB bond."

HSBC also completed 180 million yuan worth of
cross-border settlements to China and Hong Kong via the new yuan clearing facility for a number of its key commodities customers such as R1 International Pte Ltd, Singapore Cogeneration (Steel) Pte Ltd and Julong Group.

For Standard Chartered, close to half of its bonds were taken up by investors in Singapore.

Its Singapore CEO, Ray Ferguson, is encouraged by the result, and he does not think yuan liquidity will be an issue.

According to the Monetary Authority of Singapore (MAS), as of December 2012, the size of non-bank and interbank RMB deposits in Singapore is close to RMB100 billion.

Singapore's current yuan deposits may only be a fraction of that in Hong Kong, but the city-state in March doubled a currency-swap agreement with China to 300 billion yuan.

Standard Chartered Bank Singapore's Ray Ferguson said: "Hong Kong has been at the forefront from the beginning in the internationalisation of the currency, but I think, here - particularly when you add the big presence of regional treasury centres, and the active wealth management industry that we have, the huge flows involved there - I think there's going to be plenty of liquidity in the Singapore market, going forward."

DBS, Southeast Asia's biggest bank, will also join the fray with a bond issue of its own.

DBS said "more details on this issuance will be shared in due course".

Before the start of yuan clearing in Singapore, offshore yuan bonds or dim sum bonds were mainly cleared out of Hong Kong.

DBS Bank's managing director and head of fixed income, Clifford Lee, said: "The addition of Singapore as an offshore Renminbi clearing centre would mean that we have an opportunity out of Singapore to further promote the use of RMB as a functional currency, and to expand the discussions and engagement beyond what is already done out of Hong Kong."

Investors are closely watching to see if Singapore-listed oil-rig builder Keppel Corp or developer CapitaLand will be the first non-bank firm to issue dim sum bonds out of the country.

Earlier this year, the two firms expressed interest in issuing yuan-denominated bonds offshore.

channelnewsasia.com