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. Distractions over, Beijing revives its global currency ambitions 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. Sharjah is a relatively frequent issuer in the international debt markets, having sold US$750 million of 10-year sukuk in 2014 and $500 million of five-year sukuk in January last year. Aluminium giant Rusal plans 10 billion yuan panda bond issue in Shanghai Other governments and companies in the Gulf are also weighing possible panda bond issues. Saudi Arabia’s Vice-Minister of Economy and Planning Mohammed al-Tuwaijri said last week that Riyadh was willing to consider funding itself partly in yuan to cover its budget deficit and major investment projects. The Industrial and Commercial Bank of China is talking to governments and state-linked entities in the Gulf that are interested in issuing yuan-denominated bonds in China, a senior executive at ICBC, China’s largest bank, said earlier this week.