New yuan bonds set to debut in Hong Kong
By Zhang Fengming |
September 9, 2009, Wednesday
|
Print Edition
Print Edition
CHINA will soon issue its first yuan-backed sovereign bonds in the Hong Kong Special Administrative Region to build a market for the currency in the global financial hub.
The Ministry of Finance will offer 6 billion yuan (US$878 million) of the bonds on September 28 to retail and institutional investors, the ministry said yesterday.
"The bond issue shows the central government's support for Hong Kong to further expand the yuan business as an international financial center," the statement said.
Peng Wensheng, head of China research at Barclays Capital, said that while the amount is not large, it is a significant development in the internationalization of the yuan and for the development of the Hong Kong bond market.
"The issue broke new ground in an effort to promote the domestic currency as an international currency," Peng said yesterday.
Power play
China is pushing for a stronger role for the yuan in the global arena to match its rising economic power.
Earlier this month, China agreed to use the yuan to buy up to US$50 billion worth of the International Monetary Fund's first bond issue. The IMF will lend the Chinese currency to its member countries in a step that will help promote the yuan as a future reserve currency.
Hong Kong is considered a key platform from which China will launch a raft of new deals aiding the globalization of the domestic currency.
The People's Bank of China earlier signed six currency swap agreements worth 650 billion yuan with the special administrative region and Indonesia, South Korea, Malaysia, Belarus and Argentina. Since July, China has started cross-border trade yuan settlement between Hong Kong and five Chinese mainland cities, including Shanghai.
Bigger field
Financial authorities also expanded the issuance of yuan bonds from commercial banks this year after a cautious start years ago.
China allowed domestically incorporated subsidiaries of foreign banks to issue yuan bonds in Hong Kong this year, expanding the field from the big state-owned banks.
"These developments suggest the authorities see the benefits as outweighing any potential concerns, and more issuers from the mainland are likely to come to the Hong Kong market," Peng said.
HSBC Bank (China) Co, the domestically incorporated arm of HSBC Holdings, doubled its minimum bond offering to 2 billion yuan this month due to heavy oversubscription from retail and institutional investors.
The Shanghai-based bank in June launched another 1 billion yuan of yuan-backed bonds in Hong Kong to institutional investors.
The Ministry of Finance will offer 6 billion yuan (US$878 million) of the bonds on September 28 to retail and institutional investors, the ministry said yesterday.
"The bond issue shows the central government's support for Hong Kong to further expand the yuan business as an international financial center," the statement said.
Peng Wensheng, head of China research at Barclays Capital, said that while the amount is not large, it is a significant development in the internationalization of the yuan and for the development of the Hong Kong bond market.
"The issue broke new ground in an effort to promote the domestic currency as an international currency," Peng said yesterday.
Power play
China is pushing for a stronger role for the yuan in the global arena to match its rising economic power.
Earlier this month, China agreed to use the yuan to buy up to US$50 billion worth of the International Monetary Fund's first bond issue. The IMF will lend the Chinese currency to its member countries in a step that will help promote the yuan as a future reserve currency.
Hong Kong is considered a key platform from which China will launch a raft of new deals aiding the globalization of the domestic currency.
The People's Bank of China earlier signed six currency swap agreements worth 650 billion yuan with the special administrative region and Indonesia, South Korea, Malaysia, Belarus and Argentina. Since July, China has started cross-border trade yuan settlement between Hong Kong and five Chinese mainland cities, including Shanghai.
Bigger field
Financial authorities also expanded the issuance of yuan bonds from commercial banks this year after a cautious start years ago.
China allowed domestically incorporated subsidiaries of foreign banks to issue yuan bonds in Hong Kong this year, expanding the field from the big state-owned banks.
"These developments suggest the authorities see the benefits as outweighing any potential concerns, and more issuers from the mainland are likely to come to the Hong Kong market," Peng said.
HSBC Bank (China) Co, the domestically incorporated arm of HSBC Holdings, doubled its minimum bond offering to 2 billion yuan this month due to heavy oversubscription from retail and institutional investors.
The Shanghai-based bank in June launched another 1 billion yuan of yuan-backed bonds in Hong Kong to institutional investors.
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