The three-year bond is the largest ever non-Chinese RMB bond to be issued, at RMB 3bn the equivalent of around 300m.
The government will use the sovereign RMB debt to finance Britain’s reserves. Currently Britain only holds reserves in US dollars, euros, yen and Canadian dollars. Today’s issuance is a possible signal that the RMB could be used as a future reserve currency.
“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,” says Chancellor George Osborne.
“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.”
The coupon, which corresponds to the cost of servicing the bond for the government, was set at 2.70 per cent; and allocations were made to a range of global investors, including central banks, treasuries and fund managers.