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China offers first yuan-backed bond in HK

CHINA today started its first yuan-backed sovereign bond sale in Hong Kong, offering a higher coupon rate than on the mainland to build up the yuan's overseas market.

The Ministry of Finance will sell the 6-billion-yuan (US$878 million) issue until October 20 to retail and institutional investors.

The two-year debt has a coupon rate of 2.25 percent while three-year bonds sit at 2.70 percent. The five-year bonds, open only to institutional investors, have a coupon rate of 3.30 percent.

"The issuance of the yuan sovereign bonds in Hong Kong is a key step for the globalization of the renminbi (yuan)," said Henry Tang, chief secretary of the Hong Kong Special Administrative Region.

"In the near future, the renminbi will be one of the major currencies in the region or even in the globe," Tang said.

Stephen Green, Standard Chartered Bank's head of research in China, said that as more banks are allowed to settle in yuan and more yuan bonds are issued, a market for the local currency will develop.


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