China issues first batch of bonds to fund new forex investment agency

BEIJING, Aug 29, 2007 (AFP) – China was to sell nearly 80 billion dollars worth of government bonds Wednesday in the first batch of a planned special issue to fund a new foreign exchange investment agency, state media reported. The Ministry of Finance was to issue on Wednesday 600 billion yuan (79.4 billion dollars) as part of the planned special treasury bonds sale totalling 1.55 trillion yuan, said the China Securities Journal.

Proceeds of the bond issue, authorised by China’s parliament in late June, will be injected into the new state forex investment agency, tasked with diversifying and maximising returns on part of the country’s huge forex reserves.

The bonds carried yields of 4.3 percent with maturities of 10 years, according to the official Chinabond website.

The Agricultural Bank of China will act as middleman in channeling the first batch of special treasury bonds from the ministry to the central bank, it added.

Currently, Chinese law prohibits the treasury from directly issuing bonds to the central bank.

The state investment agency is expected to open for business in September but it has already invested three billion dollars of the reserves under its management in US private equity firm Blac