Analysts split over yuan bonds

ALTHOUGH investors in China have responded warmly to the country's 100 billion yuan (about HK$88.8 billion) bond issue since its launch last month, analysts are divided on whether the issue will be fully subscribed.

They said the warm reception was due to a lack of other attractive investment channels, the high inflation rate and the support from securities houses and state-owned corporations about to be listed.

Some doubted that the current issue size, China's largest to date, would be subscribed fully.

Proceeds from the two and three-year bonds will finance the Government's budget deficit, estimated to reach 129.2 billion yuan in the current financial year.