Hong Kong’s offshore renminbi market has been given a big boost with news that Caterpillar, the US bulldozer maker, is offering a two-year Rmb1bn bond - the second multinational to launch an issue after McDonald’s Rmb200m bond in August. As Robert Cookson and Hal Weitzman report on ft.com, Caterpillar, which has extensive operations in China, is understood to have secured approval from Chinese regulators – including the People’s Bank of China and the State Administration of Foreign Exchange – to transfer the proceeds of the bond sale to the mainland.
While the market for so-called “dim sum” bonds - renminbi-denominated bonds issued in Hong Kong - started in 2007, there have been just over 20 deals so far, as issuance was initially limited to Chinese financial institutions.But since February, it has become possible for any company in the world to tap the dim sum market, though issuers still need to gain approval from Beijing to move the proceeds from Hong Kong to the mainland, write Cookson and Weitzman. Beijing has liberalised the use of the renminbi in Hong Kong as part of a much bigger plan to boost the international role of the currency and reduce China’s reliance on the US dollar. In the latest development, Chinese premier Wen Jiao Bao and Vladimir Putin, his Russian counterpart, on Tuesday pledged to boost the use of the rouble and renminbi in bilateral trade. Reuters reported that, speaking during a visit by Wen to St Petersburg, Putin said: So far we have been paying each other in foreign currencies, first of all in dollars. Now, and this is only the first step, trade in the rouble has started in China. In December the yuan will be traded in Moscow. Trade in roubles started on Monday in China’s regulated onshore foreign exchange markets. Trade in renminbi is due to start next month on Moscow’s Micex exchange. Both countries plan that, over time, the direct currency trade will reduce their reliance on US dollars and encourage settlement in renminbi and roubles.