* Planned sale comes amid renewed FX volatility, more yuan
* March quarter set a record for offshore yuan bond sales
By Michelle Chen
HONG KONG, April 28 China's Ministry of Finance
will sell the biggest batch of yuan-denominated bonds it has
offered in Hong Kong in a bid to boost the appetite among
The MOF said on Monday it will issue 28 billion yuan ($4.48
billion) in offshore yuan bonds this year, the highest level
since the issuer first tapped the dim sum market in 2009.
In 2013, the MOF issued only 23 billion yuan on bonds in
Hong Kong. This year's jumbo-sized issuance comes as the former
British colony's offshore market has been hit by sharp currency
volatility and as authorities have moved to promote use of the
Chinese currency in Europe and Asia.
Even before the MOF's announcement of its plan, the overall
dim sum market has been buoyant. In the first three months of
2014, about 125 billion yuan in bonds - a record for any
quarter - were issued. In the last quarter of 2013, issuance was
53 billion yuan.
China is accelerating the pace to expand the footprint of
its currency and open up more channels for cross-border fund
flows, in order to lift the global status of the yuan and make
it match China's position as the world's second-largest economy.
The country's securities market regulator said this month it
would allow cross-border stock investment between Shanghai and
Hong Kong, another step towards opening China's capital account.
FIRST BATCH IN MAY
The first batch of the MOF's 2014 bonds, worth 16 billion
yuan, will be sold on May 21 to institutional investors, foreign
central banks and regional monetary authorities.
The rest will be offered to institutional investors and Hong
Kong residents in the second half of the year.
Demand from institutional investors is expected to be robust
as there is a lack of high-quality instruments in the offshore
yuan market. (For a chart of quarterly offshore yuan bond
issuance, see link.reuters.com/kyr38v)
Foreign central banks are also active buyers of high-quality
dim sum bonds as they try to diversify their reserve portfolios.
Last year, when the MOF sold dim sum bonds, about eight central
banks participated, including ones from Asia, South America and
The MOF is the biggest and most prolific player in the
primary market of dim sum bonds and its bond sales are a much
awaited event among investors as it sets the tone for other
issuers. This year's sales will make its issuance since 2009 top
108 billion yuan.
Despite the recent weakness of the Chinese currency, yuan
payments rose in value by 29 percent in March from a month
earlier and climbed one place to seventh position as a global
payments currency with a market share of 1.62 percent, from 1.42
percent in February, global transaction services organisation
SWIFT said on Monday.
China's renminbi has weakened more than 3.5
percent this year, wiping out its gains last year, and analysts
expect more near-term weakness for the currency.
($1 = 6.2536 Chinese Yuan)
(Editing by Saikat Chatterjee and Richard Borsuk)