MOF issues 6b yuan bonds in Hong Kong
Published: 28 Sep 2009 10:02:01 PST
By Tu Lei in Beijing and Dai Ping in Hong Kong
The Chinese government started a sale of 6 billion yuan ($879 million) worth of bonds in Hong Kong Monday, a move aimed to improve the international status of its currency, according to the Ministry of Finance (MOF).
This is the first time the central government has issued bonds of any sort and especially yuan-denominated government bonds outside of the mainland.
Individual investors are expected to buy at least two billion yuan ($292.91 million) worth of two- and three-year notes and fund managers can purchase the three- and five-year bonds.
The coupon will stay at 3.30 percent for five-year bonds, 2.70 percent for three-year securities and two-year debt at 2.25 percent, according to a press release by Bank of Communications and Bank of China, the leading bond managers. Comparable yields on the mainland market at the end of last week were 2.94, 2.31 and 1.82 respectively.
To make the selling process simpler, investors can buy the bonds via counters, online banks, and phone banking, said MOF.
Monday morning, at the Bank of China, Kwun Tong branch, some Hong Kongers were already requesting for information.
An interested Honk Kong buyer surnamed Lee told the Global Times that in Hong Kong, the interest rates on a standard local currency deposit account are almost zero, but the interest rates for the bonds are more than two percent, and she expects there is a potential RMB revaluation.
"Yuan treasury bonds are issued by the central government. I have confidence in China's economic future, so I'm prepared to buy 10,000 bonds," said Lee.
A Hong Konger named Wu told the Global Times that, since Lehman collapsed, he has become more alert about financial investment. Before he makes a decision, he will observe the market atmosphere in the coming days.
Since the 6 billion yuan worth of bonds only accounts for 11 percent of current RMB savings in Hong Kong, analysts said that investors will just test the waters during this period.
Mei Jun, a specialist at the Financial and Securities Institute at the People's University of China, told the Global Times Monday that the issuing is "significant" because bonds were only issued in the domestic market before, and it is possible to see bond issuances in more places abroad in the near future.
Mei added the bonds selling will diversify investment products and benefit the development of the bonds market in Hong Kong.
However, Xie Guozhong, an independent economist, told the Global Times Monday that the sale is more a political symbol and will not have a real impact on the investment market.
The bonds issuance is to show the central government's confidence in Hong Kong's economy. There has been bond selling before, said Xie.
The Bank of East Asia Ltd and HSBC Holdings' China unit have already sold yuan bonds in Hong Kong this year, reported Bloomberg Monday.
Published: 28 Sep 2009 10:02:01 PST
By Tu Lei in Beijing and Dai Ping in Hong Kong
The Chinese government started a sale of 6 billion yuan ($879 million) worth of bonds in Hong Kong Monday, a move aimed to improve the international status of its currency, according to the Ministry of Finance (MOF).
This is the first time the central government has issued bonds of any sort and especially yuan-denominated government bonds outside of the mainland.
Individual investors are expected to buy at least two billion yuan ($292.91 million) worth of two- and three-year notes and fund managers can purchase the three- and five-year bonds.
The coupon will stay at 3.30 percent for five-year bonds, 2.70 percent for three-year securities and two-year debt at 2.25 percent, according to a press release by Bank of Communications and Bank of China, the leading bond managers. Comparable yields on the mainland market at the end of last week were 2.94, 2.31 and 1.82 respectively.
To make the selling process simpler, investors can buy the bonds via counters, online banks, and phone banking, said MOF.
Monday morning, at the Bank of China, Kwun Tong branch, some Hong Kongers were already requesting for information.
An interested Honk Kong buyer surnamed Lee told the Global Times that in Hong Kong, the interest rates on a standard local currency deposit account are almost zero, but the interest rates for the bonds are more than two percent, and she expects there is a potential RMB revaluation.
"Yuan treasury bonds are issued by the central government. I have confidence in China's economic future, so I'm prepared to buy 10,000 bonds," said Lee.
A Hong Konger named Wu told the Global Times that, since Lehman collapsed, he has become more alert about financial investment. Before he makes a decision, he will observe the market atmosphere in the coming days.
Since the 6 billion yuan worth of bonds only accounts for 11 percent of current RMB savings in Hong Kong, analysts said that investors will just test the waters during this period.
Mei Jun, a specialist at the Financial and Securities Institute at the People's University of China, told the Global Times Monday that the issuing is "significant" because bonds were only issued in the domestic market before, and it is possible to see bond issuances in more places abroad in the near future.
Mei added the bonds selling will diversify investment products and benefit the development of the bonds market in Hong Kong.
However, Xie Guozhong, an independent economist, told the Global Times Monday that the sale is more a political symbol and will not have a real impact on the investment market.
The bonds issuance is to show the central government's confidence in Hong Kong's economy. There has been bond selling before, said Xie.
The Bank of East Asia Ltd and HSBC Holdings' China unit have already sold yuan bonds in Hong Kong this year, reported Bloomberg Monday.