MOF issues 8-billion-yuan bonds in Hong Kong
Published: Sep 23, 2021 11:07 AM
RMB Photo: VCG

RMB Photo: VCG

The Ministry of Finance will issue 8-billion-yuan ($1.24 billion) worth of treasury bonds in the Hong Kong Special Administrative Region (HKSAR) on Thursday, marking the first issue of a total of 20-billion-yuan treasury bonds in Hong Kong in 2021, according to media reports. 

Analysts pointed out the issuance of yuan-denominated treasury bonds in Hong Kong will better meet the demand for the allocation of yuan assets by international investors, which will strongly contribute to the process of yuan internationalization and demonstrate China's confidence and determination in opening up to the outside world. 

The issuance will help consolidate Hong Kong's position as an international financial hub and a significant offshore yuan center while enhancing the international status of yuan, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Thursday, noting that yuan is a crucial connection point linking the financial markets on the Chinese mainland and Hong Kong. 

With the approval of the State Council, China's cabinet, the Ministry of Finance will issue 20 billion yuan of yuan-denominated treasury bonds in Hong Kong in three batches in 2021, with a scale of 8 billion yuan, 6 billion yuan, and 6 billion yuan respectively, domestic finance website reported on Thursday. 

As for the issuance method, the 8-billion-yuan government bonds issued this time in Hong Kong will have a 2-year and 5-year issuance of 5 billion yuan and 2 billion yuan respectively, with an additional one billion yuan of bonds due in 2031 being issued which is also the first time after three years to issue additional 10-year yuan treasury bonds, according to CCTV. 

Moreover, Xi noted that the issuance of government bonds in Hong Kong will enable domestic funds to enter Hong Kong and participate in transactions through southbound trading of the Bond Connect mechanism between Hong Kong and the mainland, which will be launched on Friday. 

"The issuance of treasury bonds in Hong Kong is not only a manifestation of the liberalization of the yuan, but also promotes the opening of cross-border transactions within the bond market," said Xi.  

International index provider FTSE Russell announced in March that Chinese government bonds (CGBs) will be added to the FTSE World Government Bond Index (WGBI) from October 29.