China's ICBC in talks with Gulf states on yuan bonds: report

The Industrial and Commercial Bank of China (ICBC) is in talks with GCC governments and state-linked entities that are interested in issuing yuan-denominated bonds in China, Zhou Xiaodong, general manager of ICBC Dubai told Reuters on Wednesday.

One government entity is currently applying to issue yuan-denominated instruments, known as panda bonds. Accordingly, it would be the Middle East's first issuer in China’s interbank bond market, he added without further details.

“The debt market in the Middle East is growing very fast, and while a lot of it is related to U.S. dollar issues, renminbi-denominated bonds are an alternative channel for companies wanting to tap the Chinese market," Zhou said.

Potential issuers had to have investment-grade credit ratings.

China is encouraging foreign bond issuers as part of its efforts to internationalize its yuan or renminbi currency and open up sources of finance for its planned “Belt and Road” trade route.

Last week, Saudi Arabia’s vice minister of economy and planning Mohammed Al-Tuwaijri said the Kingdom was willing to consider funding itself partly in yuan to cover its budget deficit and finance major investment projects.