February 26, 2014 / 8:06 AM / 4 years ago

IFC to issue 1 bln yuan dim sum bond in London in March

HONG KONG, Feb 26 (Reuters) - The International Finance Corporation (IFC), an arm of the World Bank, said on Wednesday it will issue a 1 billion yuan ($163 million) dim sum bond in London next month, an incremental step to enhance London’s role in offshore yuan business and promote the yuan beyond Hong Kong.

The bond will be listed on the London Stock Exchange, becoming the largest dim sum bond listed there by a multinational institution.

Competition among potential offshore yuan centres, including Taiwan, Singapore, London and Luxembourg, has intensified as Beijing steps up efforts to promote the wider use of its currency.

While London’s position as the world’s biggest foreign exchange and bond trading centre gives it advantages, regional rivals also want a part of the growing yuan business.

The British and Chinese governments are in active discussions about setting up a clearing bank in London for China’s currency, Britain’s finance minister George Osborne said last week in Hong Kong.

“This issuance will help demonstrate the strong demand from international investors for offshore renminbi bonds, while providing an alternative source of renminbi funding for investment in the country,” Jingdong Hua, IFC vice president and treasurer, said in a statement.

The IFC tapped China’s onshore bond market as early as 2005, when it became the first issuer of Panda bonds, yuan-denominated bonds raised in mainland China by a non-Chinese entity.

It also issued its first yuan-denominated discount note, equivalent to about $50 million with a three-month maturity, in the offshore yuan market last February.

The offshore yuan bond market has grown rapidly since the first dim sum bond was issued in July 2007. Total issuance volume amounted to nearly 50 billion yuan year to date, according to Thomson Reuters statistics.

HSBC, ICBC , and JP Morgan have been appointed as lead arrangers for the bond.

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