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France, Luxembourg eyeing up RMB bonds after UK’s trailblazer

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China is keen to step up the pace of internationalising the renminbi - and European governments are keen to help. France is preparing to issue a renminbi bond, three banking sources have told Emerging Markets, a sister publication of GlobalRMB. Luxembourg is also considering a deal, one said.

The deals could come quite soon, following the UK’s inaugural transaction, announced in September, which could be issued as soon as next week for up to Rmb2bn ($326m). Bank of China, HSBC and Standard Chartered are leading the UK issue.

Tian Guoli, chairman of Bank of China, addressed the Institute of International Finance conference on Saturday on internationalising the renminbi, and called for the creation of a global renminbi clearing system.

Emerging Markets asked Tian if other governments were likely to issue renminbi bonds, and he said “certainly”. Michel Sapin, French finance minister, was very interested in the idea, Tian said.

A supranational agency executive said he understood France was “looking at it very seriously”.

And additionally, an investment banker said: “There is no formal mandate or request for proposals, but there is a commitment to issue.” Luxembourg was in the same position, he said.

“The world needs another currency,” Douglas Flint, group chairman of HSBC, told Emerging Markets. “For a long time it was sterling, and now the dollar. But China is the largest trading nation in the world, and therefore the currency should have a far greater weight in international flows than it does. It’s only a matter of time. A lot more companies have a need for renminbi because it’s a much more important currency.”

This would only increase as the renminbi moved towards full convertibility.

“Now you’ve got the UK getting involved and you’ve seen the ECB this week make comments that it [the renminbi] is going to be part of reserve management,” Flint said.

The Deutsche Finanzagentur said it was not planning any foreign currency bond issues because it saw no cost saving versus selling Bunds in euros.

Håkan Wohlin, global head of debt origination at Deutsche Bank, said “as a political statement it would make sense for countries like France and Luxembourg to issue renminbi”, as well as potentially easing companies’ access to the currency — though they could also do this via their banks and the ECB’s swap line with the People’s Bank of China.

“The growth and internationalisation of the renminbi marks a tremendous opportunity for sovereigns to issue renminbi bonds and diversify their funding as well as staying close to China politically and helping the currency develop,” Wohlin said. “Sovereigns should take advantage of this opportunity. I’m more surprised we haven’t seen any issue before. It’s maybe only a matter of time before other sovereigns, for example from CEEMEA and Asia or LatAm, look to borrow too.​”

In September, Chinese vice-premier Ma Kai visited Paris for the annual Sino-French economic and financial dialogue, with Michel Sapin.

Paris — like London, Frankfurt and Luxembourg — is eager to promote itself as a hub for renminbi internationalisation. Paris has Rmb20bn of bank deposits, second in Europe after Luxembourg, and has hosted Rmb10bn of bond issuance, double London’s tally.

Bank of China can now provide renminbi clearing 20.5 hours a day. “Renminbi products need to be actively traded and invested, and more products should be introduced,” Tian said.

(This story first appeared on 

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