HSBC has transacted the first-ever offshore option on a Chinese currency non-deliverable interest rate swap (CNY NDIRS).
The transaction involved HSBC buying a five-year option to pay fixed (receive floating) and to receive fixed (pay floating) on a CNY50 million ($6.4 million) five-year non-deliverable interest rate swap with a financial institution counterparty.
The new swaption deal follows the introduction of a CNY non-deliverable interest rate swaps market in August this year.
Anita Fung, head of global markets, Asia-Pacific at HSBC says, “Following the successful launch of NDIRS contracts in August, there’s been a healthy pickup in activity, with the volume of such contracts reaching CNY6.7 billion in barely three months.”
HSBC says its new CNY NDIRS swaption product will help offshore corporate clients and financial institutions hedge their interest rate exposure in the Chinese currency.