Financial Secretary Henry Tang has hailed the People's Bank of China's announcement of the administrative rules for Mainland financial institutions to issue renminbi bonds in Hong Kong. The first issue can be launched this month.

Mr Tang said this is an important step towards the actual launch of renminbi bond business in Hong Kong.

"This also marks the implementation of another specific recommendation in the Action Agenda on China's 11th Five-Year Plan after discussions at various levels between the Central and Hong Kong Governments," he added.

Important breakthrough

Mr Tang said the launch of the renminbi bond business in Hong Kong is an important breakthrough, as the city will become the first place outside the Mainland that has a renminbi bond market. This will help strengthen Hong Kong's status as an international financial centre.

The new initiative offers local banks new business opportunities, like partaking in issuing renminbi bonds and trading them in the secondary market. Hong Kong residents will also have a new choice of renminbi asset for investment.

Following the approval by the State Council of the renminbi bond business and the release of the Action Agenda on China's 11th Five-Year Plan, the Hong Kong Monetary Authority and the People's Bank of China have been working closely on the preparations. To facilitate the issuance and trading of renminbi bonds, the development of the Renminbi Real-Time Gross Settlement System was completed on February 26 as scheduled.

HK well prepared

"With the announcement of the administrative rules today, the preparation for issuance of renminbi bonds in Hong Kong has largely been completed," Mr Tang said.

"We understand that several Mainland financial institutions have already expressed interest in issuing renminbi bonds in Hong Kong and have begun their preparations for bond issuance. We expect the first issue of renminbi bonds can be launched before the end of June.

"We consider that it is a remarkable achievement to have accomplished such a task which is of big significance to our financial service industry on the occasion of the Hong Kong Special Administrative Region's 10th anniversary."