UK Government targets 2.9% yield on debut renminbi bond

2014-10-14

SINGAPORE, Oct 14 (IFR) - The United Kingdom government has released price guidance on a debut three-year offshore renminbi bond at a yield in the area of 2.9%.

The move follows an investor presentation in London yesterday by officials from HM Treasury, and confirms that Britain will be the first foreign country to issue bonds inChina's currency.

The Bank of England is acting as HM Treasury's agent in managing the sale of the renminbi bond. No target size has been announced, but market participants are expecting a Rmb2bn (US$325m) deal.

The proceeds of the bond will be used to finance the nation's reserves. Currently, Britain only holds reserves in US dollars, euros, yen and Canadian dollars, so a British RMB sovereign bond signals the RMB's potential as a future reserve currency, according to a statement from the HM Treasury.

Bank of China, HSBC and Standard Chartered are leading the trade.