Posted on 01/05/2011 9:19:05 AM PST by FromLori
The World Bank is issuing its first bonds denominated in China's yuan in Hong Kong, joining a growing number of borrowers tapping the new debt market as Beijing gradually promotes of its tightly controlled currency abroad.
The World Bank said buyers of its 500 million yuan ($76 million), two-year bond were mainly Hong Kong-based financial institutions, companies and wealthy individuals. It said the money will go into its general fund, rather than being raised for a specific purpose. The yuan is not traded on global currency markets but Beijing has loosened controls and allows Hong Kong banks to use it. Hong Kong is Chinese territory but has its own currency and a Western-style legal system and often is used as a site for mainland companies to interact with foreign investors.
Beijing began allowing foreign companies to issue yuan debt last year. The Asian Development Bank, Caterpillar Inc. (CAT) and McDonald's Corp. have sold yuan-denominated debt to finance activities in China.
Buyers of such bonds hope to gain from both interest payments and the growing strength of the yuan, which is rising against the U.S. dollar.
(Excerpt) Read more at apnews.myway.com ...
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