Sharjah government plans to issue yuan bond in China, sources say

The government of the emirate of Sharjah plans to issue a yuan-denominated bond in China, which could make it the first Middle East issuer in the Chinese interbank bond market, according to sources familiar with the matter.

Sharjah, one of the seven members of the United Arab Emirates, is in the process of applying to issue the instrument, known as a panda bond, said the sources, who declined to be named as the matter is not yet public.

The size of the planned issue was not known, and the government of Sharjah declined to comment.

Gulf governments and companies have boosted bond issuance over the past year because low oil prices have pushed state budgets into deficit and tightened liquidity in their banking systems.

To encourage greater global use of the yuan and diversify funding sources for its belt and road trade route connecting China by land and sea to Europe, Beijing is keen to attract more foreign issuers of bonds. Its interbank bond market is the third largest after the United States and Japan.