Hong Kong, Jan 5 (IANS) The World Bank has issued its first bonds in the yuan as China promotes the international use of its currency, also known as renminbi.
The World Bank said in a statement Monday that it is raising 500 million yuan ($76 million) by issuing the two-year bonds, which pay out 0.95 percent in interest semi-annually.
It said the money would be added to its normal pool of cash, rather than being raised for a specific purpose.
The bonds are issued in Hong Kong by the Washington-based lender’s International Bank for Reconstruction and Development arm, China Daily reported.
While the investors are mainly Hong Kong based-financial institutions, corporate treasuries and wealthy individuals, the World Bank said its global reputation will also help international investors who have not invested in renminbi before.
The World Bank’s bond issue follows those by other institutions such as the Asian Development Bank and companies such as Caterpillar and McDonalds, which issued yuan bonds last year as they seek to tap growing investor demand for financial products in China’s currency.
Beijing has been trying to promote Hong Kong as a platform for international banking in the yuan. The former British colony has its own currency, the Hong Kong dollar, and banking system but often serves as a testing ground for China.
Authorities in China have been gradually loosening restrictions on the use of the yuan in Hong Kong. Hong Kong banks started offering renminbi services in 2004 and now offer a range of transactions ranging from deposits to credit cards to trade financing that allows foreign companies to pay their Chinese business partners in yuan.
