South Korean government to issue 3 billion yuan bonds in China

By Park Sae-jin Posted : December 8, 2015, 14:24 Updated : December 8, 2015, 14:24


China’s central bank said on Tuesday the South Korean government will issue 3 billion yuan worth of bonds in China's domestic interbank market.

In a statement carried in its website, the People's Bank of China said the agreement was reached in November when Chinese Premier Li Keqiang visited South Korea. No date was given for when the bonds would be issued.

South Korean government aims to issue a yuan-denominated bond in China within this year, according to finance ministry sources. It will be the first time that a foreign government issues bond in China’s domestic market

The move will mark a shift for the South Korean government which have so far only issued U.S. dollar and euro foreign exchange bonds.

The sale will expand South Korea’s holding of the Chinese currency and comes after the International Monetary Fund (IMF) decided to add yuan to its basket of reserve currencies beginning in October 2016.

Analysts say the latest move will help local companies to issue their own yuan-based corporate bonds in China down the road.

The IMF’s decision to add the yuan to the Special Drawing Rights (SDR) basket alongside the dollar, euro, pound sterling and yen, represents a recognition of China as a global economic power and a key milestone in the country’s path to an integration into global finances.

Seoul and Beijing opened a direct Korean won-yuan market in December 2014, and the two nations inked a 64.7 trillion won ($55.8 billion) currency swap agreement reached in April 2009.

By Alex Lee
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