The Import and Export Bank of China, known as EximBank, announced on Monday that its board of directors has given the bank a "go-ahead" to issue Renminbi bonds on the Hong Kong market.

This makes EximBank the third bank in less than two months to consider issuing Renminbi bonds in Hong Kong.

The EximBank said it was fully prepared for the issuance but would not disclose specifics.

"Once it is approved by the People's Bank of China, we will start issuance procedures and file with Hong Kong financial authorities," an EximBank statement said.

The Bank of China announced on May 28 that it plans to issue Renminbi bonds valued at no more than three billion yuan in Hong Kong. The plan, however, has to be approved by its shareholders on June 14, according to China Business News.

One month earlier, the China Construction Bank announced it was likely to issue Renminbi bonds in Hong Kong valued at five billion yuan if market conditions were favorable.

Local banks' enthusiasm for Renminbi bond issuance in Hong Kong was kindled in January by a circular from the People's Bank of China, which said that mainland financial institutions, once approved, could issue Renminbi bonds on the Hong Kong market. However, the capital raised must be handled by Hong Kong clearing banks.

Another factor piquing mainland banks' interest is the rising yuan. Although Renminbi bank deposits in Hong Kong stood at only 24.9 billion yuan (around 3.2 billion U.S. dollars) in February, equivalent to only five percent of non-Renminbi bank deposits, the appreciation potential of the yuan is regarded by many industrial analysts as a lure to investors in Hong Kong.

The Hong Kong dollar has been cheaper than the yuan for several months, with the central parity rate of yuan against Hong Kong dollar standing at 0.97970 on Monday.

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It remains unclear when and how China's central bank will kick off Renminbi bond issuances in Hong Kong. But Hong Kong Financial Secretary Henry Tang has said he hopes the administrative arrangements and legislative procedures for the issuance could be introduced in the first half of the year.

Established in 1994 and solely owned by the central government, China EximBank is a state export credit agency and an important element in the backup system for China's foreign trade.

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