China will encourage foreign institutions to raise funds through renminbi-denominated bonds in the interbank bond market, as part of efforts to accelerate the opening-up of the financial market and improve the renminbi's internationalization.

The People's Bank of China, the central bank, and the Ministry of Finance jointly issued regulations on Tuesday to promote bond issuances by foreign institutions in the Chinese mainland interbank bond market.

The foreign institutions, which are allowed to issue renminbi-denominated bonds, or the so-called Panda bonds, include international development institutions, foreign governments, overseas financial institutions and non-financial companies.

The rules further clarified standards for foreign bond issuers on application conditions and procedures, information disclosure, and matters related to bond issuance registration, entrustment and settlement, said a statement on the central bank's website.

The move will improve the internationalization of China's bond market, and is a significant step in further opening the country's financial sector, it said.

"For the next step, the central bank will work with other government departments to steadily promote the opening-up of China's financial market."

Li Minhong, vice-president of Deutsche Bank (China), said market liquidity and pricing mechanisms in the domestic bond market will improve with the entry of more global issuers and investors. "It could also help accelerate the renminbi's internationalization," he said.

International development institutions issued the first renminbi bond in China's interbank market in 2005. By the end of August, foreign institutions had issued renminbi bonds worth 178.16 billion yuan ($25.9 billion), according to central bank data.

Wang Qing, chief macro strategist with Golden Credit Rating International Co Ltd, said the new Panda bond issuance rules will help improve coordination between various financial regulators.

"The bond issuance regime is developing more toward international standards," said Wang.

Pan Gongsheng, the central bank's vice-governor, said earlier at a forum in Shanghai that China will continue to promote opening-up in the capital market to better serve the nation's economic development and broader opening-up drive.

"China will further open up some nonconvertible items under the capital account, and those already convertible will see more liberalized trading," he said.

The nation's financial regulators announced more measures to facilitate the opening process, including removing the requirements for a three-month capital lockup period for Qualified Foreign Institutional Investor (QFII) and for RMB Qualified Foreign Institutional Investor (RQFII) redemptions.

The monthly repatriation limit of 20 percent of its mainland assets for a QFII was also abolished under the new regulations.