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Bank of China issues world’s first public Tokyo Overnight Average Rate floating rate notes

Allen & Overy has advised the joint lead managers on Bank of China Limited, Tokyo Branch’s issuance of JPY10 billion floating rate notes due 2024, referencing the Tokyo Overnight Average Rate (TONA). This landmark transaction marks the world’s first public offering of TONA-linked bonds.

TONA is a Japanese yen risk-free interest rate benchmark recommended by the Bank of Japan as a replacement for Yen LIBOR which ceased at the end of 2021. The TONA-linked bonds, issued under Bank of China Limited’s USD40bn medium term note programme, serve as a new investment product alternative to the conventional Yen LIBOR for both Japanese domestic investors and international investors.

Applications have been made for the TONA-linked bonds to be listed on the Hong Kong Stock Exchange and TOKYO PRO-BOND Market. 

The A&O team comprised partners Jaclyn Yeap and Agnes Tsang, with support from Alan Zhang, Zhefei Zhang, Charles Chiu and Rachel Cheung.

In addition to this transaction, A&O advised on Bank of China Limited’s issuance of dual-currency floating rate notes referencing Secured Overnight Financing Rate (SOFR) Index and Sterling Overnight Index Average (SONIA) Compounded Index as well as Bank of China Macau Branch’s issuance of the first SOFR-based bonds in Asia in October 2019.