Beijing to seek 15b yuan in Hong Kong bond offer

PUBLISHED : Wednesday, 10 August, 2011, 12:00am
UPDATED : Wednesday, 10 August, 2011, 12:00am


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The Ministry of Finance will raise 15 billion yuan through the sale of bonds in Hong Kong on Wednesday next week, marking the city's third issue of yuan-denominated sovereign bonds.

The sovereign debt will be sold through tender via the Hong Kong Moneymarkets Unit run by Hong Kong Monetary Authority. Of the total, 6 billion yuan will be in three-year bonds, 5 billion yuan in five-year bonds, 3 billion yuan in bonds with a seven-year maturity and 1 billion in 10-year bonds.

Ben Kwong Man-bun, chief operating officer of KGI Asia, said the sovereign bonds would be popular with investors. 'Investors who like to bet on the valuation gain of the yuan will be interested in buying the sovereign bonds.'

Louis Tse Ming-kwong, director of VC Brokerage, said the sovereign bonds would be a safe haven for investors if the recent market turmoil continues.

'With global stock markets declining in recent days after the US credit rating downgrade, Chinese sovereign bonds looks attractive,' Tse said. 'The sovereign bonds may not carry a high interest rate but at least it is a product that carries limited risks, while offering some return for investors.'

Veteran banker Wilson Chan Fung-cheung, honorary secretary of City University Eminence Society, also said the bonds would be popular, and that the offer size may be too small to meet the demand.

'The current market is so volatile that banks, pension funds, insurance companies and the treasuries of the big corporations and universities would look for the bonds, which could offer them stable returns with low risks,' he said.

However, he said it would be a long time before Chinese sovereign bonds replace those issued in the US and European countries.

'The yuan is not yet fully convertible. The status of the US dollar and the US treasuries still are such that no one can replace them.'