Seoul, Dec 15 (IANS) South Korea’s finance ministry on Tuesday announced that it has succeeded in issuing the first sovereign yuan-denominated bonds in China.
Three-year bonds worth three billion yuan ($460 million) denominated in the Chinese currency were floated by the South Korean government at a yield of 3 percent in China’s bond market, the ministry said.
Chinese investors regarded Seoul’s yuan bond issuance as a timely decision given the Chinese currency’s inclusion in basket currencies for Special Drawing Rights (SDR) and ample liquidity in the Chinese bond market, Xinhua news agency quoted the ministry as saying.
The yield was the lowest end of the ministry’s price guidance of 3.0-3.5 percent, indicating strong demand for the yuan bonds issued by South Korea for the first time in China.
The ministry said the yuan bond issuance was aimed at diversifying foreign currency reserves in response to the Chinese currency’s inclusion in the SDR basket.
It expected the government’s yuan bond sales to serve as a bridgehead to help South Korean firms and financial institutions enter the Chinese bond market, which has a big growth potential.