In Hong Kong today, China issued its first bond denominated in yuan for foreign investors. With China’s prospects growing as the world’s dominant manufacturing base and the long-term policy to increase domestic consumption, it looks like investors will be lining up for more Chinese debt in the years to come. The issue itself consisting of 2,3 and 5 year bonds brought in close to a billion dollars ($880 million).
Bank of Communications senior fixed-income dealer Midas Chu was quoted in a Dow Jones Newswires report as saying the “very satisfactory” results demonstrate yuan bonds’ popularity in Hong Kong.
“This would encourage [mainland] China to issue more on a regular basis in the future,” Chu was quoted as saying.
Analysis: With pressure being brought to bear for China to let their currency appreciate, these bonds could become much more valuable if the Chinese yuan rises in value.