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HSBC, StanChart to issue yuan bonds

Updated: 2009-06-04 07:18

(HK Edition)

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HONG KONG: HSBC Holdings Plc and Standard Chartered Bank said yesterday they were preparing for yuan-denominated bond issuance on the mainland to help the country develop its local-currency financial markets.

The two are the first foreign banks to announce plans to issue yuan bonds on the mainland since the central government last month said it would open up issuance to locally incorporated overseas lenders.

Beijing last month also granted permission to HSBC and Bank of East Asia to issue yuan bonds in Hong Kong.

Standard Chartered said it planned to raise up to 3.5 billion yuan ($512.5 million) selling bonds in the mainland's interbank market.

HSBC gave no figure for its bond-issue plan and neither bank gave a time frame for the issues, which are subject to regulatory approval.

Both banks said they were issuing the bonds to support the development of the country's financial markets, stressing that they were already strongly capitalized and highly liquid.

The central government has been taking various steps to develop the nation's debt market amid rising demand by financial institutions for low-risk investment instruments.

Last month, the Finance Ministry said it had already issued more than half of the 200 billion yuan in bonds that it plans to sell this year on behalf of local governments. It said it had already sold 111.8 billion yuan worth of paper on behalf of 23 provinces since the first bond was launched on March 20.

It said demand came mainly from commercial banks.

Local governments need the proceeds of the bond sales to help finance their share of Beijing's 4 trillion yuan economic stimulus plan.

Vice Finance Minister Zhang Shaochun said the issuance of regional government bonds and corporate bonds will continue so as to finance the national stimulus package.

The bond issues will be accompanied by other measures, including acceleration of tax reform, increase in the salaries for low-income households and optimization of the government's fiscal spending to help bolster domestic demand, which is key to the economy.

He said the implementation of the government's fiscal policy implementation of its massive stimulus package has been smooth so far.

Beijing plans to put on sale a total of 200 billion yuan of regional government bonds. By the end of last month, it had already sold 88 billion yuan of these bonds.

China Daily - Agencies

(HK Edition 06/04/2009 page4)

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