Bank of China plans to launch yuan bonds in Luxembourg
Lender marketing the first yuan bonds to be listed in the euro zone by a Chinese company
Bank of China has returned to the market to raise funds and is marketing its first euro-zone-listed, yuan-denominated bond to be traded in Luxembourg.
The mainland's third-largest lender started marketing the notes at a yield of 3.7 per cent yesterday morning, according to two bankers close to the deal. Proceeds from the sale are expected to be retained in the local branch to support corporate activities, one banker said.
The bonds, the first to be listed in the euro zone by a Chinese firm, will be issued by BOC's Luxembourg branch and carry a maturity of three years. In January, the bank sold 2.5 billion yuan of a three-year bond in London at 3.45 per cent.
Chinese banks face pressure to raise funds to withstand an expected rise in bad loans.
The transaction is a step forward in the internationalisation of the currency and in Luxembourg's ambition to catch up with London as a centre for Chinese investment products in Europe.
Demand is likely from central banks eager to diversify their currency holdings, as well as large insurance firms and commercial lenders, a banker close to the deal said.