JAPAN’S biggest banking group Mitsubishi UFJ Financial Group Inc plans to sell yuan bond for the first time in Japan, starting from next Wednesday, the group told Shanghai Daily yesterday.
Bank of Tokyo-Mitsubishi UFJ, the main lending unit of the group, will manage a private offering of a two-year yuan-denominated bond worth about 350 million yuan (US$56.3 million), said spokesman Kazunobu Takahara.
The yuan bond will be sold at an annual yield of 3.64 percent, similar to the rates in major offshore markets such as Hong Kong, the bank said.
The private sale will be limited to institutional investors including life insurance companies and local banks.
“We hope to help nurture a yuan market in Japan with the issuance,” Takahara said.
The offering comes after tension eased between China and Japan after Chinese President Xi Jinping met with Japanese Prime Minister Shinzo Abe last month, and China’s Minister of Finance Lou Jiwei called for an “actively promoting practical cooperation with Japan in yuan bond issue” in a bilateral finance minister summit on May 6.
The issue is also linked to China’s efforts to internationalize the yuan since 2009, Takahara noted, adding that China is poised to free up capital-account dealings and to abolish a requirement to get pre-approval before exchanging yuan for other currencies.
“China wants to see issuers raising yuan debt not just locally, but in diverse locations to promote globalization,” Bloomberg News cited Mana Nakazora, chief credit analyst in Tokyo at BNP Paribas SA, as saying.
The yuan took a 2.1 percent share of worldwide payments in April, up from just 0.3 percent three years earlier, said SWIFT, a global telecommunications network for banks. Offshore issuances of yuan bonds surged 50 percent to 460 billion yuan in 2014, SWIFT added.