Britain issues first yuan bond outside China

[London] Britain on Tuesday launched a yuan-denominated sovereign bond, the first of its kind by a Western nation outside China and the largest ever non-Chinese issue.

"The UK government has today successfully issued a sovereign bond in China's currency, the renminbi (RMB)," it said in a statement.

"The RMB 3.0 billion bond, which is equivalent to approximately £300 million (380 million euros, US$480 million), has a maturity of three years" at a yield of 2.7 per cent.

Britain already revealed last week that it was set to issue the bond in China's yuan/renminbi currency.

The proceeds will be used to finance Britain's foreign currency reserves.

"Currently, Britain only holds reserves in US dollars, euros, yen and Canadian dollars, so today's issuance signals the RMB's potential as a future reserve currency," the statement added.

The bond is part of government plans to boost links with Beijing, bolster London's market for yuan and underline the capital's status as a global financial hub.

Bank of China, HSBC and Standard Chartered arranged Tuesday's bond sale.

"The UK government's sovereign renminbi bond issue, the first by a Western country, has been a great success and will deliver value for money to taxpayers," said finance minister George Osborne.

"Our long term economic plan is working, but the job isn't done. We need to export to fast growing economies like China, and attract more investment to our shores.

"To do that, we need to make sure China's currency is used and traded here, as that will be not only good for China, but good for British jobs and investment too." British politicians have been scrambling to make London China's Western financial hub as Beijing loosens its tight regulations on international trading in the yuan.

London has repeatedly stressed the importance of improving economic ties with Asian powerhouse China.

Last year the yuan overtook the euro as the world's second-largest trade currency after the US dollar. AFP