Date
22 May 2017
China's first offshore yuan bond will be listed in London. It will pay 3.28 percent interest and expire in June 2019. Photo: Reuters
China's first offshore yuan bond will be listed in London. It will pay 3.28 percent interest and expire in June 2019. Photo: Reuters

China sells first offshore renminbi bond

China’s finance ministry has sold its first offshore renminbi bond in London, a step toward boosting the international profile of its currency.

The US$500 million debt is denominated in yuan and matures in June 2019, paying 3.28 percent interest, the Wall Street Journal reports, citing, an official announcement.

The debt will be listed on the London Stock Exchange.

Investors placed 8.5 billion yuan (US$1.3 billion) of orders for the bonds, according to a person familiar with the deal, with 58 percent of the securities going to investors from Europe, the Middle East and Africa, and the remainder heading to Asian accounts.

The sale comes amid a broader push from China for the yuan to take on a more significant role in global financial markets as Beijing loosens restrictions on its rigidly controlled exchange-rate and financial system.

In November, the International Monetary Fund said the yuan would be added to its elite basket of reserve currencies in October 2016 in an acknowledgment of China’s growing economic might.

“Making it an investible currency is very important.

This bond is part of that process,” said Jean-Marc Mercier, global co-head of debt capital markets at HSBC Holdings Plc., which managed the deal along with Bank of China.

“It’s very important to list in the UK under English law on the London Stock Exchange to make it an internationally investible bond. After this success, maybe they will look to do more in the future,” he added.

There have been signs of a pickup in offshore renminbi debt sales.

Two of China’s largest banks sold local-currency bonds in the U.S. earlier this month.

Last October, China’s central bank sold an offshore bond in London for the first time.

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