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Chinese financial authorities have announced a plan to authorise international finance organizations to issue RMB-denominated bonds.
The move is aimed at reducing the risk of fluctuating exchange rates faced by Chinese enterprises seeking loans from international banking institutions.
The plan has been approved by the State Council and was announced during a seminar sponsored by the Finance Ministry and the International Finance Corporation, or IFC, the private sector investment arm of the World Bank.
Together with the Asian Development Bank, the IFC is among the first batch of international financial organizations that will be allowed to issue long-term RMB bonds on the Chinese market.
Zhao Xiaoyu, dept. chief of Int'l Dept. China's Finance Ministry, said, "The move will soon be realized and the IFC, together with other multilateral financial institutions will offer RMB loans to the Chinese enterprises here. In this way, we hope to reduce exchange risks long suffered by our firms."
For its first bond issue on the Chinese market, the IFC is expected to issue some 120 million US dollars worth of debt denominated in Chinese yuan. The maturity will be five to 10 years.
As a long-term financing source for the Chinese market, the IFC loaned some 400 million US dollars to the Chinese market last year. In its latest move, the international lender has signed a deal with a Chinese energy group to provide 30 million US dollars worth of loans to its electricity project.
(CCTV.com October 27, 2004)
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