Hainan and Shenzhen Governments to Issue Offshore Renminbi Bonds in Hong Kong

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Two of China’s local governments have unveiled plans to collectively issue up to 10 billion yuan in offshore renminbi bonds in Hong Kong, in a move which is expected to help bolster the internationalisation of the renminbi.

On 24 October the Hainan province finance department and the Shenzhen municipal finance department issued separate announcements indicating that they plan to issue local government renminbi bonds in Hong Kong that will be listed on the Hong Kong Stock Exchange.

Hainan’s finance department plans to issue up to 5 billion yuan in offshore local government renminbi bonds with terms of two years, three years and five years, marking the first time that the province will make an issue of local government bonds outside of mainland China.

Funds raised by the issue will be used to support Hainan’s maritime economy and maritime environmental protection projects, as well as green projects and social healthcare and housing developments.

Shenzhen’s finance ministry said that the municipal government also plans to issue up to 5 billion yuan in offshore local government bonds via Hong Kong with the same range of maturities as Hainan’s issue.

The three and five year issues will be green and blue bonds, with funds raised to be used for projects including transit development and waste water treatment, as well as to “accelerate the transition towards green development models” within the Greater Bay Area of Guangdong, Hong Kong and Macau.

Wang Shaohui (王少辉), senior researcher with the Bank of China Hainan Financial Research Institute, said that the bond issues will diversify the renminbi offshore debt market and help to drive internationalisation of the renminbi.

“The offshore renminbi debt market is a key driver for achieving internationalisation of the renminbi, and the issuance of blue offshore renminbi bonds and sustainable development bonds will help to attract international investors with a preference for sustainable development, and help to strengthen the vitality of the offshore renminbi bond market.”