The Ministry of Finance is starting to sell the yuan-denominated green sovereign bonds on Monday, with the initial price guidance for the three- and five-year notes at yields of around 1.8% and 1.9%, according to people familiar with the matter. The notes may be priced later Monday, they said, asking not to be identified discussing private matters. Royal Bank of Canada is a joint bookrunner for the sale, they added. 

The sale follows the ministry’s announcement for plans to market up to four billion yuan (US$600 million) of green sovereign bonds in Canada this week. It would mark the ministry’s first offshore issuance of yuan-denominated bond beyond Hong Kong, Macau and London, Bloomberg-compiled data shows. 

The yuan bond offering extends China’s push to promote currency internationalisation and connect with more overseas investors amid growing doubts over the dollar. This also coincides with improving bilateral relations between China and Canada, which includes an agreement last week to extend a tariff deal and continue discussions on boosting Canadian exports to the Asian nation.

The ministry did not explain the reasoning behind issuing a Hong Kong-listed bond in Canada. Chinese Vice Premier He Lifeng is visiting Canada this week to co-chair the second China-Canada Economic and Financial Strategic Dialogue. 

Canadian Prime Minister Mark Carney also plans to meet with Chinese President Xi Jinping later this month in China. 

In recent years, China has stepped up offshore green sovereign debt to showcase its commitment to a sustainable transition. The most recent issuance of such yuan green debt took place in May in Hong Kong, featuring three- and five-year notes priced at 1.42% and 1.56%, respectively.

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