Russian corporate giants issue yuan bonds as China’s huge economy and stable monetary policy bolster the currency

Photo: VCG

Use of the Chinese yuan continues to grow in Russia, as another Russian mining giant issued 4.6 billion yuan ($666 million) in bonds, the second time in a month that Russian companies have issued such a emission.

Chinese analysts say Russian market participants are exploring the yuan as an alternative to the US dollar and euro, as the United States has frequently abused its monetary hegemony, seriously damaging its credibility in the international market. Meanwhile, market demand for the yuan continued to rise.

Russia’s largest gold producer PJSC Polyus has completed a 4.6 billion yuan bond issue, less than a month after Russian aluminum company Rusal issued 4 billion bonds denominated in yuan on the Russian market.

PJSC Polyus completed the five-year issue on Tuesday, and the bonds were listed on the Moscow Stock Exchange with a coupon rate of 3.8%. The bond underwriter was Gazprombank, according to caixin.com.

According to the issuance documents, banks accounted for 71% of buyers, investment companies 15%, individual investors 13% and asset management companies the remaining 1%.

Gazprombank said no threshold was set for individual investors and the one-time subscription amount was only 1,000 yuan.

The issuance of foreign currency bonds mainly depends on whether the target country fulfills the conditions such as a strong economy, stable financial and monetary policies and a large volume of capital market, according to Zhang Hong, associate researcher at the Institute of Russia. , Eastern European and Central Asian Studies of the Chinese Academy of Social Sciences.

“China has done well in all of these aspects,” Zhang told the Global Times on Thursday.

Zhang explained that the economic sanctions imposed by the United States and its European allies in Moscow have closed the door to financing from Russia in European and American markets, and that Russian companies urgently need new investment channels. . China’s economic development is resilient, and its market size is huge and continues to grow, which can meet Russia’s capital needs.

In addition to the sweeping economic sanctions imposed on Russia, the United States has frequently abused its monetary hegemony, which has damaged the reputation of the US dollar in the international market and increased the Russian market’s demand for the yuan, a noted Zhang.

International demand for the yuan has shown an upward trend since the start of this year amid global geopolitical and economic changes.

Russian companies and banks participated in nearly 4% of international yuan payments by value in July. This is up from 1.42% the previous month and zero in February when the Russian-Ukrainian conflict began, a report by global financial messaging entity, Society for Worldwide Interbank Financial showed. Telecommunication.

The yuan maintained its position as the fifth most active currency for global payments by value in July, signaling a steady pace of internationalization. Russia has become the third largest market using the yuan for global payments.

The issuance of yuan-denominated bonds by Russian companies mainly reflects China’s growing economic strength, and it also shows the continued increase in trade ties between the two countries, said Wang Peng, a researcher at the Academy of Beijing social sciences. the Global Times on Thursday.

The yuan maintained a steady pace of internationalization supported by promising prospects for the Chinese economy.

China’s Ministry of Finance and the Macao Special Administrative Region (SAR) government on Wednesday announced a plan to issue yuan-denominated treasury bills worth 3 billion yuan in Macao on September 7, a move aimed at enhancing financial cooperation between the Chinese mainland and the SAR. .

And the Ministry of Finance issued yuan-denominated treasury bills worth 5 billion yuan in the Hong Kong SAR on August 10.

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