Shanghai Plans to Issue 3 Billion Yuan of FTZ Municipal Bonds
(Shanghai) — Shanghai plans to issue 3 billion yuan ($443 million) of municipal debt in the city's free-trade zone in an attempt to attract more foreign investors.
The bonds, which will have a three-year maturity, are expected to be on the market by the end of November at the earliest, sources said. They will replace the government's other short-term liabilities that have high interest rates.
The majority of investors buying local government bonds in the interbank market have been banks in China, a source close to the finance bureau in Shanghai told Caixin, adding that the Shanghai government wants to attract more non-banking and foreign institutional investors.
The demand for yuan holdings is expected to rise following the currency's inclusion in the International Monetary Fund's Special Drawing Rights basket on Oct. 1. The bonds are expected to play a role in further satisfying foreign investors' appetite for high-quality yuan assets.
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