World Bank taps offshore yuan bond market for first time
SHANGHAI (Reuters) - The World Bank issued its first yuan-denominated bond, raising $76 million and trying to promote the use of the Chinese currency in international markets at a time when China's stake in the institution is about to increase.
The World Bank said in a statement on Wednesday the International Bank for Reconstruction and Development, its low-interest lending arm, had priced the two-year paper at 0.95 percent, representing the lowest yield so far on same-maturity dim sum bonds -- the nickname for yuan-denominated bonds issued in Hong Kong.
The offshore yuan market in Hong Kong has seen explosive growth in less than a year, with renminbi deposits in the former British colony surging more than 150 percent in the six months to October 2010. Global companies and institutions such as the Asian Development Bank, McDonald's Corp and Caterpillar have all issued yuan bonds.
The World Bank's 500 million yuan bond issue arrived when China's shareholding in the World Bank is about to increase, potentially making China the third-largest stakeholder in the lender after the United States and Japan.
"This is a landmark transaction for the World Bank as it is the first World Bank issuance in RMB, and signals the strong interest of the World Bank in supporting the development of the RMB market," Doris Herrera-Pol, Global Head of Capital Markets at the World Bank, said in a statement.
"It is a privilege for us to have this opportunity that establishes the institution as a premier issuer in the fastest growing capital market in the world."
HSBC was the lead manager for the deal, which will settle on January 14.
(Reporting by Samuel Shen and Jason Subler; Editing by Kevin Plumberg)