Bonds News
- Govt. gives nod to sale of yuan bonds in HK
Date: 12-Jan-2007 Sources: (Shenzhen Daily)
THE Central Government has agreed to allow its financial institutions to sell yuan-denominated bonds in Hong Kong, a long-awaited move that expands the scope of financial services in the city and allows investors broader access to yuan assets.
Upon winning approval, financial institutions would be allowed to sell yuan bonds in the city, the central bank said.
'The move would expand the conduits back to the mainland for the yuan held by Hong Kong residents and companies,'the People's Bank of China said in a statement on its Web site.
'This strengthens the ties between Hong Kong and the mainland.'
But the central bank added that an unspecified period of preparation was necessary before the first yuan bonds would hit the market.
Further specifics would be hammered out early next week at a meeting between officials of the Hong Kong Monetary Authority and the People's Bank of China, Hong Kong Financial Secretary Henry Tang said.
Were such issues to gain critical mass, international investors would be able to pick up lower-risk yuan assets now restricted mostly to mainland Chinese buyers, largely because of capital controls.
'The news is very encouraging. But we need to look at further details to see whether such bond issues will bring significant revenue for Hong Kong banks, or the issuers,'Raymond Or, chief executive of Hang Seng Bank said.
Analysts say Chinese policy banks would most likely be among the first to make use of the facility, which enables Chinese issuers to tap local investor demand.
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