TAIPEI, Feb 22 (Reuters) - Deutsche Bank is planning to sell Chinese yuan bonds of up to 2 billion yuan ($320.49 million) in Taiwan as soon as the first quarter, three sources with close knowledge of the issue said on Friday.
The German bank will be the second bank to sell such bonds in Taiwan, eyeing a market that was initially expected to reach 2 billion yuan in its first year but may top it.
China and Taiwan signed an agreement in September for the establishment of a clearing system for yuan transactions on the island, setting the stage for local and foreign banks to launch the bond issue.
The agreement was an advance in China’s efforts to promote use of its currency in overseas markets to match its rising clout as the world’s second-largest economy.
Deutsche Bank is set to price the three-year bond at an indicative yield of 2 percent to 2.5 percent and the five-year bond at between 2.3 percent to 2.7 percent, two of the sources said.
“If the bonds are well received, Deutsche Bank could issue up to 2 billion yuan, otherwise, it will be 1 billion,” said the other source.
Sources told Reuters earlier this week that Chinatrust Financial is set to price Taiwan’s first Renminbi (RMB) bond at an indicative yield of 2.9 percent. The firm has received regulatory approval to raise up to T$5 billion ($168 million) for the bond..
All renminbi bonds, dubbed “Formosa Bonds” in Taiwan and the equivalent of Hong Kong’s dim sum bonds, will list on the Over-the-Counter (OTC) stock exchange.
Reporting by Roger Tung; Writing by Faith Hung; Editing by Sanjeev Miglani