(PBOC) were not available for comment yesterday.
While no further details are available at this stage, experts believe the bond will be a long-term, fixed-rate bond with an interest rate higher than its domestic rivals, whose returns remain lower because of seven consecutive interest-rate cuts in the past five years.
The move coincided with remarks earlier this month by Guo Shuqing, PBOC vice-president, who said China will welcome renminbi bonds issues from international financial institutions.
China's bond market, dominated by treasury bonds, is much slimmer compared with its counterparts in developed countries.
"It shows ADB's strong confidence in China's long-term economic outlook in the future," said Su Ping, vice-president of the Research Institute at the Ministry of Finance.
"As one of the largest regional financial institutions in the Asia-Pacific Rim, ADB's bond issue will be highly creditable and could bring more follow-up attempts."
His comments were echoed by Zuo Xiaolei, chief economist of the Galaxy Securities--China's largest stock house, who said the bond issue could also become a good trial benchmark for a further opening-up of the market to more business-orientated foreign companies.
"Rather than playing a role of fund raising, the bond could enable both lender and borrower to ward off possible exchange and interest risks," said Zuo.
Judged from a long-term perspective, exchange and interest risks could rise when the rate gap between renminbi and US dollar exaggerate as both the lending and repayments are in US dollars.
"The bond issuance could also generate better and stable returns to domestic investors compared with the currently fewer sizable investment channels in the domestic capital market," said Zuo.
(China Daily October 25, 2002)
