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HONG KONG: China Development Bank is setting up operations in Hong Kong as part of overall plans by the government to attract more foreign investment into the Chinese bond market by boosting the use of its currency – the yuan – in the international arena.
The state-owned lender has just sold yuan-dominated bonds worth US$4.4 billion.
The Beijing-based lender is using the fund-raising exercise to transform itself from a government sponsored bank to a commercial entity.
Li Jiping, vice president of the China Development Bank, said: "If we can set up a platform in Hong Kong, our business on the mainland through Hong Kong will be more efficient, and the transition will be smoother into the world market."
The move to use the territory as a launch pad has been welcomed by Hong Kong officials, with the territory’s financial secretary John Tsang saying the move will add depth to the local bond market.
Tsang said: "Expanding the renminbi bond market will not only strengthen Hong Kong's financial position but showcase Hong Kong to be a test-bed for yuan reform for global markets."
China Development Bank was the first to issue renminbi-denominated bonds in the territory two years ago.
The latest bond sale was fully subscribed, even though response was not overwhelming due partly to new sale rules in place to spell out risks, implemented after the Lehman Brothers minibond debacle.
- CNA/yb
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