Headquarters of the People's Bank of China, China's central bank, in Beijing in October 2018 Photo: IC

The People's Bank of China (PBC), the country's central bank, successfully issued 10 billion yuan ($1.4 billion) of six-month yuan-denominated central bank bills in the Hong Kong Special Administrative Region (HKSAR) on Thursday, as part of the effort to improve the yuan bond yield curve in Hong Kong and the currency's internationalization. 

The move establishes the mechanism to issue central bank bills in Hong Kong, and assists the enrichment of the Hong Kong financial market with the high credit rating of yuan investment products and yuan liquidity management tools, according to a statement by the PBC. 

"The issue of yuan-denominated bills is a routine operation," Liu Jianying, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce (MOFCOM), told the Global Times on Thursday. 

"The PBC has issued yuan bills in Hong Kong many times within a year, an act to improve the yuan bond yield curve and promote the development of the offshore yuan currency and bond markets, which will help the internationalization of the yuan."

Since November last year, the PBC has conducted 11 issues of central bank bills worth 130 billion yuan in Hong Kong, with terms of three months, six months and one year.

The Ministry of Finance issued treasury bonds worth 5 billion yuan in Hong Kong on Wednesday, of which 4.5 billion yuan was issued to institutional investors and 500 million yuan to foreign central banks and regional monetary authorities. 

The offering of yuan-denominated central bank bills was well-received by the market, and the subscription ratio reached 3.6. The bid-winning interest rate of the six-month yuan-denominated central bank bill, at 2.89 percent, is basically in line with the current offshore market interest rate of the same term.

The total bidding amount exceeded 36 billion yuan. Buyers included commercial banks, central banks, funds, international financial organizations and other investors in the offshore market. 

"Hong Kong is facing huge downward pressure on its economy and the latest trade data is a direct proof," a finance industry insider told the Global Times on Thursday on condition of anonymity. "The central bank and the Finance Ministry have been issuing bonds intensively in Hong Kong, signaling the possibility that the central government wants to maintain Hong Kong's position as one of the world's financial centers."

Hong Kong's exports fell by 6.3 percent and imports were down 11.1 percent on a yearly basis in August, according to trade data released by the Hong Kong government on Thursday.