The successful issuance of the first U.S. dollar-denominated medium-term note on the Chinese inter-bank market by the China National Petroleum Corporation (CNPC) in 2009 showed that the foreign currency-denominated bond market in China has enormous room for future development and provided an opportunity to further develop China s bond market, said Liu Shiyu, Deputy Governor of the People s Bank of China (PBC), at a press conference held in celebration of the success of the first dollar-denominated medium-term note issuance in China.
The successful issuance of CNPC s dollar-denominated medium-term note on the Chinese inter-bank market is a milestone, Liu Shiyu remarked, noting that the issuance came when the international financial crisis is still spreading and the global economy and trade remain sluggish. Liu said this reflected market s confidence both in the outlook of the CNPC and in China s ability to address the international financial crisis, maintain sustainable economic growth and ensure sound development of the financial markets under the leadership of the State Council.
Liu Shiyu pointed out that the issuance of dollar-denominated medium-term note in China offers enterprises with new channels to raise foreign currencies and helps Chinese enterprises diversify foreign currency financing sources, allowing them to obtain foreign currency funds at a lower cost. It would motivate competitive enterprises to press ahead with "going global" strategy, support their overseas expansion and bolster their growth, and is a concrete example of implementing the policies aimed to support economic growth, improve social welfare and maintain social stability.
Moreover, it would speed up the development of China s bond market, offer more foreign exchange products for institutional and individual investors, and help improve the long-existed situation of limited products and small issuance of foreign currency bonds, promoting the development of a multi-layered capital market.
The issuance of dollar-denominated notes would also help Chinese bond market integrate with international markets in terms of legal system, taxation, accounting rules, information disclosure and settlement standards, thus pushing forward the internationalization of the Chinese bond market, added Liu.
The Deputy Governor also expressed his confidence that, with concerted efforts from the National Association of Financial Market Institutional Investors (NAFMII) and its members, the pilot program of dollar-denominated medium-term notes will be promoted, the foreign currency bond market will be expanded, and the Chinese bond market will be improved in terms of breadth and depth, and make new contributions to the sustainable economic and financial development.
