China's Ministry of Finance announced here Thursday to issue 23 billion yuan (3.64 billion U.S. dollars) in yuan-denominated sovereign bonds in Hong Kong as an effort to support Hong Kong's economy.

The issuance is the fourth and largest of its kind, following the sale of 6 billion yuan in yuan-denominated treasury bonds in 2009, 8 billion yuan in 2010 and 20 billion yuan in 2011.

Among the total, 15.5 billion yuan worth of bonds, including 7 billion yuan of three-year bonds, 5.5 billion yuan of five-year bonds, 1 billion yuan of seven-year bonds, 1 billion yuan of 10- year bonds and 1 billion yuan of 15-year bonds, will be sold to institutional investors via the bond-tendering platform of the Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority (HKMA).

The institutional subscription amount was about 58.6 billion yuan, over three times as much as the issuance size, Vice Minister of Finance Li Yong said at the launching ceremony here.

Meanwhile, 5.5 billion yuan worth of bonds will be offered to individual investors through retail counters, with a 2-year tenor and an annual interest rate of 2.38 percent.

"The issuance of yuan sovereign bonds in Hong Kong again will bring about mutual benefits and a win-win situation to both the mainland and Hong Kong through the complementary effects and interaction of the two financial systems," said Donald Tsang, chief executive of the city while attending the ceremony.

One highlight of this round's issuance is the special placement of yuan-denominated sovereign bonds, totaling 2 billion yuan, to overseas central banks and monetary authorities for the first time, with the coupon rate the same as the successful tenders decided by CMU with the same maturities.

This move will provide the central banks with a new channel for capital flow as well as help further promote the internationalization of the yuan, or China's currency Renminbi ( RMB), Li said. Five overseas central banks have subscribed for 3. 06 billion yuan worth of the bonds.

According to a memorandum of cooperation signed by the ministry and the Hong Kong Exchanges and Clearing Limited (HKEx), yuan- denominated sovereign bonds can get listed in HKEx.

The offshore RMB bond market commenced in 2007 when China's central bank permitted mainland-based financial institutions to issue RMB bonds in Hong Kong. In the following years, the issuer and investor base of the bonds has been expanded, with the market experiencing exponential growth in 2010 and 2011.

As of April 2012, the total amount of RMB bonds issued in Hong Kong reached 218.4 billion yuan, according to statistics of the HKMA.

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