The government has announced it has begun the process of issuing the world’s “first” non-Chinese sovereign bond in the Chinese currency, the renminbi (RMB).
The government has appointed Bank of China, HSBC and Standard Chartered to help deliver the planned sale of the RMB, following a “fair and rigorous process”.
Currently, Britain only holds reserves in US dollars, euros, yen and Canadian dollars, so the government stated that a British RMB sovereign bond signals the RMB’s potential as a future reserve currency.
Proceeds of the bond will be used to finance the nation’s reserves.
The government said Britain is already the fastest growing market in Europe for RMB payments, more than doubling volumes over the year to this July. During 2013, total RMB foreign exchange trading in London averaged $25.3bn (£15.7bn) per day, a 50 per cent increase from 2012.
Chancellor George Osborne said that increasing exports to fast growing economies like China, and attracting more investment into the UK is key to the long-term economic plan.
“To do that, we need to make sure China’s currency, the RMB, is used and traded here, as that will be not only good for China, but good for British jobs and investment too.”
The bond will be issued in due course, subject to market conditions, and further details of the transaction will be announced by the syndicate banks, the Bank of England and the Treasury.
It will be a stand-alone issuance and of benchmark size, contributing liquidity to the small offshore RMB market, with the hope of attracting other market players in both the private and official sectors.
An investor presentation is due on 13 October.
peter.walker@ft.com
