China Development Bank said on Saturday it would issue a yuan bond in Hong Kong on Tuesday, in what will be the first Chinese currency-denominated bond to be launched outside China. "Yes," an official at the state-owned policy bank told Reuters.
"You're correct, we do plan to issue bonds in Hong Kong on Tuesday." Hong Kong is seen as a testing ground for the gradual liberalisation of China's yuan currency and more mainland banks are expected to issue yuan bonds in the territory in coming months. The China Development Bank official said details of the issue would be disclosed on Tuesday. Caijin, a Chinese magazine, reported this week that the bank was planning a 5 billion yuan (US $656 million) issue of two-year paper in Hong Kong, yielding 2 to 2.5 percent.
The Hong Kong government said it would host a launch ceremony on Tuesday for the territory's first yuan bond issue, which would be for retail investors. Beijing earlier this year gave the green light for mainland financial institutions to issue Chinese currency bonds in Hong Kong, expanding the scope of yuan business in the territory. A few years ago Beijing allowed Hong Kong banks to open Chinese currency accounts for local residents and some shops accept payment in the yuan.
Joseph Yam, chief executive of the Hong Kong Monetary Authority, said this week that he expected the market for yuan bonds in Hong Kong would be small initially because local residents' yuan deposits at Hong Kong banks amounted to only about 25 billion yuan.
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