China successfully wraps up yuan bold sale in Hong Kong

By Kim Young-gyo
HONG KONG, Sept. 2 (Yonhap) -- China has successfully completed its latest sale of yuan-denominated government debt in Hong Kong thanks to keen interest among both institutional and retail investors, government officials said Friday.
Last month the Chinese Ministry of Finance issued sovereign bonds totaling 20 billion yuan (US$3.11 billion) in the Chinese currency through Hong Kong markets.
On Aug. 17, the ministry started selling 15 billion yuan of the total amount to institutional investors. It finished selling the rest of the bonds allocated to retail investors on Wednesday.
The officials at the finance ministry said the auction gathered an order book of about 70 billion yuan from institutional investors. Retail investors also showed strong enthusiasm for the bonds, with subscriptions totaling 20.2 billion yuan.
Market watchers in Hong Kong said the keen interest was created among the investors for the Chinese government debt as investors have lost confidence in the government bonds issued by developed countries due to the European debt crisis and the downgrade of the U.S. sovereign rating by Standard and Poor's.
Expectations over the appreciation of the Chinese currency have also boosted the demand, they said.
The finance ministry said the funds it has raised from selling bonds will be used for building agricultural and industrial infrastructure, public housing, and education and health systems.
It was the third time for China to issue yuan government bonds in Hong Kong. China sold its first sovereign bonds in Hong Kong in September 2009, raising 6 billion yuan. The second yuan-denominated bond issue in Hong Kong last November raised five billion yuan.
In a move to internationalize its currency, China has been seeking introduce a growing number of financial products in yuan.
"With the ever-growing Chinese economy, and the yuan becoming an international currency," said He Guangbei, CEO of Bank of China (Hong Kong).
ygkim@yna.co.kr