South Korea's finance ministry said Tuesday that it has succeeded in issuing the first sovereign bonds denominated in the Chinese currency in Chinese mainland, opening door for South Korean players to enter the Chinese bond market.
Three billion yuan (460 million U.S. dollars) of three-year bonds denominated in the Chinese currency was floated by the South Korean government at a yield of 3 percent in China's bond market, the ministry said in a statement.
Chinese investors regarded Seoul's yuan bond issuance as a timely decision given the Chinese currency's inclusion in basket currencies for Special Drawing Rights and ample liquidity in the Chinese bond market, according to the ministry.
The yield was the lowest end of the ministry's price guidance of 3.0-3.5 percent, indicating strong demand for the yuan bonds issued by South Korea for the first time in China.
The ministry said that the yuan bond issuance was aimed at diversifying foreign currency reserves in response to the Chinese currency's inclusion in the SDR basket.
It expected the government's yuan bond sales to serve as a bridgehead to help South Korean firms and financial institutions enter the Chinese bond market, which has a big growth potential.
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