China Construction Bank has become the first Chinese bank to issue a renminbi-denominated bond in London, in the latest sign of China’s push to internationalise its tightly controlled currency.

The world’s second-largest bank by market capitalisation has raised Rmb1bn ($160m) through its London subsidiary for what a UK Treasury official described as the first so-called dim-sum bonds to be issued by a Chinese bank outside China and Hong Kong. The bonds will begin trading on Friday.

Daniel Widdicombe, head of investment banking at CCB’s London arm, said that the bonds, which mature in 2015 and pay an annual coupon of 3.2 per cent, had seen strong interest from institutional investors who wanted to participate in any rise in the value of the renminbi as well as diversify their currency exposure.

George Osborne, UK chancellor, welcomed the move as a step forward in the Treasury’s push to promote London as an offshore hub for renminbi trading, saying that the issuance of a renminbi-bond in London by a Chinese bank had been a “key priority”.

He said: “That China Construction Bank has taken the lead in making this issue in London is a demonstration of London’s developing status as the western hub for renminbi business”.

Earlier this year, HSBC announced it was the first company to issue a renminbi-based bond outside Chinese sovereign territory, raising Rmb2bn. HSBC was also one of the seven underwriters of the CCB bond.

ANZ Bank and Banco do Brasil have also issued renminbi-denominated bonds in London this year.

The launch of the CCB bond had been flagged earlier this month by Fitch Ratings, which gave the issuance an expected rating of ‘A’ based on the systemic importance of CCB in China and its long-term record of state support.

The Treasury will meet investment banks and companies next week for a two-day conference on its City of London initiative, which was launched in April to raise awareness of renminbi trading in London.

Investment banks are trying to encourage institutional investors and corporate clients to use the renminbi in international trade.

Bankers say there is still a lack of awareness among companies of the benefits of trading directly with Chinese companies in their local currency, which can reduce invoices by nearly 5 per cent, according to a recent Deutsche Bank survey.

However, the renminbi market is still very small. The currency accounts for less than 1 per cent of global currency trade, compared with 86 per cent for the US dollar, according to the Bank for International Settlements.

A survey this week from Swift, the payments company, found that global use of the renminbi for corporate payments fell in October.

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