(Bloomberg) -- Authorities in Hong Kong are following through on a pledge to bolster the city’s role as an offshore yuan trading hub via a rare issuance of bonds denominated in the Chinese currency.
The city sold 1 billion yuan ($140 million) of debt maturing in three years under its Infrastructure Bond Programme, according to a statement on the government’s website on Thursday. The offering marks the authorities’ latest effort to enhance offshore yuan liquidity amid a push to encourage a broader usage of the currency.
The sale drew 7.2 billion yuan of tenders and recorded a bid-to-cover ratio of 7.21 times, according to the statement.
“The small size may aim to test the waters,” said Ken Cheung, a strategist at Mizuho Bank. “But the 1 billion yuan amount may not be very indicative.”
Under both the infrastructure scheme and Government Green Bond Programme, the city can borrow up to HK$500 billion ($64 billion) in any currency or tenor. Hong Kong had sold its first ever green yuan bond in late 2021 in a move to promote the internationalization of the currency.
Hong Kong Chief Executive John Lee had revealed steps to deepen the city’s financial links with China at an annual policy address earlier this month. As part of the initiative, authorities are planning to establish a central clearing system for yuan-denominated bond repurchase transactions.
Officials are also weighing the launch of offshore yuan sovereign bond futures while working with China’s Ministry of Finance on boosting the size and frequency of yuan sovereign bond issuance.
Hong Kong Looks to Deepen Role as Offshore Yuan Trading Center
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