By Choi Sung-jin
Korea plans to float yuan-denominated foreign exchange stabilization bonds in China within this year, becoming the first foreign country to issue government bonds in the world's second-largest economy, officials said Monday.
Noting that the size of the yuan-based bonds will hover around 600 billion won ($517 million or 3-3.5 billion yuan), the officials expected the move will make Korea a hub of "yuan financing" and help Korean companies do business in China, especially by providing criteria for them to issue corporate debt instruments in Asia's largest economy.
If the sale proves successful by getting the nod from the People's Bank of China, it will become the first case of foreign government, not commercial institutions or international financial agencies, issuing bonds in China. It will also help Korean businesses get their hands on the Chinese currency instead of indirectly getting yuan through Hong Kong and Taiwan as has been the case so far, they said.
The announcement coincided with the International Monetary Fund's decision on Monday to include yuan in its currency basket of special drawing rights