WB plans first yuan bonds in China: report

WB plans first yuan bonds in China: report

The World Bank plans to issue yuan-denominated bonds to raise
funds for development projects in China, the Japanese daily,
Yomiuri Shimbun said Sunday.

The Bank has already begun talks with the government and the
People's Bank of China with an aim to start issuing the bonds by
December, the newspaper said.

If the plan is carried out, the World Bank will be the first
international financial institution to issue such bonds in China,
it said.

Beijing has previously allowed neither international financial
institutions nor foreign banks to issue yuan-denominated bonds in
the country, the daily said.

The Washington-based global financial body is considering
raising funds in China for spending on development projects, it
said.

Under the plan, the yuan-based bonds will be issued through
the International Finance Corporation, an arm of the World Bank
that promotes private sector investment in developing countries,
it said.

The funds will go to public projects in China and to private
firms, as well as being used for technological assistance.

The Bank is negotiating with China on the volume, timing and
period for the bonds, which it wants to carry long maturities.

It has so far procured funds mainly in dollars for loans to
large projects in China, such as railway construction.

If yuan-denominated bonds are issued, the risk from exchange
rate fluctuations is lowered in the event the Chinese government
revalues or floats its currency in the future.

The World Bank believes that with the issuance of yuan-based
bonds, China will have to strengthen cooperation with Japan, the
United States and Europe in trading and investment, which will
lead to stabilization of the international financial market, the
daily said.

In addition to the World Bank, the Asian Development Bank is
negotiating with the Chinese government on issuing yuan-
denominated bonds. --AFP