The Export-Import Bank of China (EXIM) starts offering 3 billion yuan worth of renminbi-denominated bonds with a coupon rate of 3.4 percent in Hong Kong today, increasing the total worth of yuan bonds it issued in the city to 5 billion yuan.

EXIM will be the second mainland bank in just over one month to issue yuan bonds in Hong Kong, after Bank of Communications (BOCOM). The move is in line with the central government's desire to internationalize the renminbi and foster the yuan market in Hong Kong.

The EXIM bond can be subscribed in 18 distributing banks in Hong Kong from today till Aug 29. The minimum subscription for retail investor is 10,000 yuan.

EXIM didn't announce the portion earmarked for retail investors, but a person familiar with the offering said that half of the issue would be sold to retail buyers and half to institutional subscribers.

The interest rate is higher than 0.7 percent to 0.8 percent yuan deposit rate in Hong Kong, and given the expectation that the yuan will continue to appreciate, analysts think the offering will receive good response.

Kenny Tang, an associate director at Tung Tai Securities, said there is almost no return from putting Hong Kong dollars in savings accounts. "It's likely that the yuan will continue to appreciate, even though at a slower pace, returns could be higher," Tang added."

BOCOM issued 3 billion yuan bond last month with an annual interest rate of 3.25 percent. It was the first bank to issue yuan bond in Hong Kong this year after the central government gave the go-ahead in early July for five mainland banks to each issue 3 billion yuan worth of yuan bonds in the special administrative region.

China Construction Bank is reported to have hired Standard Chartered to arrange a 3 billion yuan bond that is likely to be open for subscription by the end of the month. Bank of China and China Development Bank will be the other two issuers.

Last year, Bank of China, China Development Bank and EXIM issued a total of 10 billion yuan worth of renminbi bonds in Hong Kong.

EXIM, the official export credit agency of China, assists in financing the export of goods and services to the international markets. It will use the net proceeds to fund renminbi-denominated export credits, the lender said in a statement.

The non-performing loan ratio is 2.1 percent in 2007, said Zhao Xiaoyu, vice president of the bank.

He told reporters at a press conference yesterday that exports credit account for 78.2 percent of the bank's credit business while imports credit takes up 11.8 percent.

(HK Edition 08/21/2008 page3)