McDonald's raised its profile in China this week by becoming the first foreign non-financial company to issue debt denominated in Chinese yuan (RMB). The fast food chain raised 200RMB (£18.5m) with 3% notes that are due for repayment in 2013.
The bond issue was handled by Standard Chartered Hong Kong. Despite only being available to institutions, funds and professional investors, the issue was sold out within two hours.
What the commentators said
The bond itself is "small in relation to the size of McDonald's balance sheet", said James Quinn in The Daily Telegraph. But it's symbolic because it reflects McDonald's aspirations in China, and China's plans to reform its currency.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The bond is further evidence that "China is on the cusp of a big bang of reforms that will give foreign investors greater access to China's capital markets", said Bloomberg's Patricia Kuo. There will be massive demand from companies wanting to be involved, which will also strengthen Hong Kong's position as a financial centre. A key precedent has been set.
While it's true enough that Beijing is using Hong Kong as a "test", the ramifications of this move won't just be confined to Hong Kong or China, said Julia Leung in the Wall Street Journal. A more international yuan would "diversify" the global monetary system and create a "more stable financial architecture".
-
8 of the best converted properties for sale nowThe best converted properties for sale – from an apartment in the former Hartley’s Jam factory on London’s Southbank, to a converted 18th-century mill in Itteringham, Norfolk
-
How taking a two-year career break could leave a £26k hole in your pensionCareer breaks are increasingly common but it is important to take steps to protect your pension, as gaps compound over time
