U.K. Hires Banks for World’s Debut Non-Chinese Bond in Yuan
By Lyubov Pronina
October 09, 2014 9:04 AM EDT
The U.K. has picked banks to sell its first yuan-denominated bonds as it seeks to develop Europe’s offshore trading center for the currency.
Bank of China Ltd., HSBC Holdings Plc and Standard Chartered Plc will organize the benchmark-sized sale of securities and hold an investor presentation on Oct. 13 in London, the Treasury said in an e-mailed statement today.
Proceeds from the offering, the world’s first non-Chinese sovereign bond in yuan, will be used to finance the U.K.’s foreign-exchange reserves. Prime Minister David Cameron, who met with China’s President Xi Jinping in March, is looking to boost trade with emerging-market economies and build on London’s capacity as an international financial hub.
“Key to our long-term plan is increasing our exports to fast-growing economies like China and attracting more investment,” George Osborne, chancellor of the exchequer, said in the Treasury statement. “We need to make sure China’s currency” is used and traded here, he said.
The bond offering will be a stand-alone issuance and will attract “players in the private and official sectors” to the offshore yuan market, the government said.
The yuan overtook the euro in December to become the most used currency in global trade finance after the dollar and will become fully convertible in the next two to three years, HSBC said in a report on March 26.
Yuan Trading
More than 60 percent of yuan payments outside China are made in London, the Treasury said on March 26, citing data from the Society for Worldwide Interbank Financial Telecommunication, known as SWIFT. Total yuan foreign exchange trading in London averaged $25.3 billion per day last year, a 50 percent increase from 2012, according to the Treasury.
The U.K. in June became the first European nation to sign an accord with China to allow the direct exchange of the yuan for British pounds. The same month it also became the first non-Muslim country to sell Islamic bonds, followed by debut issues from Luxembourg, South Africa and Hong Kong in September.
To contact the reporter on this story: Lyubov Pronina in London atlpronina@bloomberg.net
To contact the editors responsible for this story: Daliah Merzaban atdmerzaban@bloomberg.net Stephen Kirkland, Chris Kirkham
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