Bonds News
- BOC plans yuan bond sale in Hong Kong
Date: 29-May-2007 Sources: (Shenzhen Daily)
BANK of China Ltd. (BOC), the nation's second-biggest lender, plans to sell as much as 3 billion yuan (US$392 million) of bonds in Hong Kong in what may be the city's first sale of yuan debt.
The securities will have a maturity of up to three years, the Beijing-based lender said in a statement to the Shanghai Stock Exchange yesterday. China Construction Bank, the third-largest, said last month it plans to sell bonds in Hong Kong.
The sale expands Hong Kong's economic ties to the mainland. The yuan has climbed 5.8 percent in the past year against the Hong Kong dollar, which is fixed to the U.S. dollar, making it more attractive for local investors to hold the mainland's currency.
'It's a nice investment as you get the pick-up on the currency appreciation and importantly, spurs the development on the yuan bond market,'' said Ben Simpfendorfer, a currency strategist at Royal Bank of Scotland Plc. in Hong Kong. 'It's another step for integration between the two economies.''
The State Council, or Cabinet, and central bank in January said mainland companies will be allowed to sell yuan-denominated bonds in Hong Kong. The Hong Kong Monetary Authority, which has kept the Hong Kong dollar pegged at around 7.8 to the U.S. dollar since 1983, said May 24 that it has no plans to switch to a link to the yuan.
Closer economic ties with the mainland, the biggest export destination for Hong Kong, helped Hong Kong's economy grow 6.9 percent last year, more than twice the U.S. growth of 3.3 percent. Hong Kong is a 'testing ground'' for the yuan as the Central Government takes steps to make the currency more flexible, Hong Kong Monetary Authority chief Joseph Yam said June 29 last year.
China Construction Bank said it may sell 5 billion yuan of subordinated bonds in Hong Kong. The proposed sale will be put to a shareholders vote June 13. Bank of China and China Construction Bank Corp. are the first to join the pilot program.
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