HONG KONG: China's Ministry of Finance sold a five billion yuan retail tranche of a 20 billion yuan ($3.13 billion) offer at 1.6 percent, the same as a previous sale in November as Beijing takes more steps to deepen the offshore renminbi bond market.
The bond tender was the biggest so far by a single issuer in the growing offshore yuan market and received heavy demand from investors hungry to buy yuan-linked assets.
Since landmark reforms in July 2010 allowed banks in Hong Kong to freely trade renminbi, trade settled in China's currency has grown by six times. Yuan-settled trade accounted for 7 percent of China's total trade in the March quarter compared with less than 1 percent in the prior year.
The growth in offshore yuan trade settlement has boosted the development of a so-called "CNH" market in Hong Kong.
Big name foreign borrowers, including the World Bank, Volkswagen McDonald's Corp and Caterpillar , have sold yuan-denominated bonds, or "dim sum" bonds, as they are more colorfully known after a local delicacy.
As of the end of last week, 88 billion yuan ($13.7 billion) worth of dim sum bonds had been issued in 2011, according to Thomson Reuters data, compared with 42.6 billion yuan worth during all of 2010.
A total of 69 billion yuan worth of bids was received for the 15 billion institutional tranche suggesting heavy demand.
Copyright Reuters, 2011
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