Author: Thomas Clouse

HSBC ISSUES FIRST RENMINBI BOND OUT OF LONDON

By Thomas Clouse

HSBC issued the first renminbi-denominated bond out of London in April.

The RMB1 billion, ($160 million) three-year bond was launched from the bank’s syndication desk in London. The internationalization of the renminbi goes hand-in-hand with its currency appreciation and the reduction of China’s dependence on exports to fuel growth. China’s trade surplus as a percentage of GDP fell from 10.1% in 2007 to only 2.8% in 2011.


Also in April, China’s central bank announced that it would widen the daily maximum trading band. China’s renminbi can now appreciate or depreciate by as much as 1% daily against the US dollar, up from 0.5% previously.


China and the US agreed to several measures to further open up their respective financial sectors in May at the fourth round of the US-China Strategic and Economic Dialogue. Among the agreements made: China will allow foreign investors to increase their stakes in domestic securities firms to 49%, up from 33%.


The US agreed, in turn, to speed up approvals for Chinese financial firms entering the US and to loosen restrictions on non-defense-related technology exports to China.