Central bank plans bills in HK to satisfy demand for offshore yuan assetsBusiness | 20 Sep 2018 6:22 pm
The People's Bank of China will issue bills in Hong Kong to feed the demand for yuan assets offshore, following a pact signed today.
Details of the PBoC bills issuance will be separately announced.
The Hong Kong Monetary Authority said the issuance of PBoC bills aims to improve the spectrum of renminbi financial products of high credit rating in Hong Kong, improve the yield curve of renminbi bonds in Hong Kong, and support the development of offshore yuan business.
Yi Gang, the governor of the People's Bank of China, Yi Gang, and Norman Chan, the chief executive of the HKMA, signed today a "Memorandum of Co-operation on Using Central Moneymarkets Unit for Issuance of PBoC Bills," for the tendering and issuance of PBoC bills through CMU BID, the HKMA's Central Moneymarkets Unit's bond tendering platform.
"All along there has been strong demand for high quality and liquid renminbi assets in the offshore market. Following the annual issuance of sovereign bonds by the Ministry of Finance, PBoC bills may further satisfy demand in this aspect, especially the demand for debt instruments of a shorter tenor,'' Chan said. "Furthermore, this will improve the yield curve in the offshore market, provide a better foundation for financial institutions to develop renminbi products, and offer more renminbi liquidity management tools for financial institutions. The issuance of PBoC bills in Hong Kong will also reinforce Hong Kong's position as the global hub for offshore yuan business."
The CMU is operated by the HKMA. It serves as a platform for tendering, clearing and settlement of bonds. Since 2010, the Ministry of Finance has used the CMU bond tendering platform to tender for offshore renminbi sovereign bonds every year.