China's Ministry of Finance to issue RMB bonds in HK: report

Sep. 8, 2009 (China Knowledge) - China's Ministry of Finance plans to sell several billion RMB worth of RMB-denominated bonds in Hong Kong this year, said sources close to the ministry and the National Development and Reform Commission, the nation's top economic planning agency, today.

One unnamed source said the size of the issuance is expected to be between RMB 5 billion and RMB 6 billion since the amount of RMB on deposit in Hong Kong is not large.

Statistics from the Hong Kong Monetary Authority show that the city's RMB deposits were RMB 55.89 billion at the end of July.

The sale of RMB bonds is part of the Chinese government's effort to help the Chinese currency go international and to help develop the RMB-bond market in the city.

A Hong Kong newspaper reported that the MOF is likely to announce the bond issuance plan later today.

BOC Hong Kong (Holdings) Ltd<2388>, the Hong Kong subsidiary of Bank of China<601988><3988>, has been assigned as the settlement bank for the issuance, according to the report.

So far, five mainland banks have issued more than RMB 30 billion in RMB bonds in Hong Kong since 2007, when the government started to permit such issuance. The five banks are Bank of China Ltd, China Construction Bank Corp<601939><0939>, Bank of Communications Co Ltd<601328><3328>, China Development Bank and the Export-Import Bank of China.

The mainland subsidiaries of HSBC Holdings Plc<0005><HBC> and Bank of East Asia<0023>  issued RMB bonds in the city after obtaining regulatory approval in late May.