China's Finance Ministry Sells Debut Offshore Renminbi Bond
May 26 2016 - 12:00PM
Dow Jones News
China's finance ministry sold its first offshore renminbi bond
Thursday in London, a move by Beijing to boost the international
profile of its currency further.
The ¥ 3 billion ($1.3 billion) of yuan-denominated debt maturing
in June 2019 will pay an interest rate of 3.28%, according to a
deal notice released Thursday by banks handling the sale, and will
be listed on the London Stock Exchange.
Investors placed ¥ 8.5 billion of orders for the bonds,
according to a person familiar with the deal, with 58% 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.
Last 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 U.K. 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.
The sales have come despite greater investor uncertainty over
the future value of the yuan after Beijing weakened the currency
last August and then again at the start of 2016. A weaker yuan
would likely erode the value of the bonds for foreign-currency
investors.
The U.K. government, meanwhile, has looked to promote London as
a destination for trading the yuan. In 2014, the U.K. Treasury sold
¥ 3 billion of yuan-denominated bonds as part of a broader strategy
to secure London as a Western hub for the Chinese currency.
Write to Christopher Whittall at
christopher.whittall@wsj.com
(END) Dow Jones Newswires
May 26, 2016 11:45 ET (15:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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