Tesco launches 'dim sum' bond to aid China expansion
Britain's biggest retailer, supermarket group Tesco, launched Thursday its first offshore yuan-denominated bond issue in Hong Kong, raising £70 million ($114 million, 79 million euros).
The world's third largest retailer by sales is the latest to join a slew of foreign firms that are aiming to tap the so-called "dim sum bond market" as China tries to turn the yuan, or renminbi, into an international currency.
Tesco meanwhile said its three-year bond issue would help to support the group's retail operations in China. It added that the commercial loan came with a semi-annual coupon of 1.75 percent and was expected to be rated 'A-' by Standard & Poor's.
"China is an important market for us and represents a great growth opportunity," Tesco's chief financial officer Laurie McIlwee said in a statement.
"This is a new and innovative way of funding our business as it continues to grow and demonstrates our commitment to China."
The bid signals the rising interest in yuan funding among foreign firms, after US fast-food giant McDonald's raised US$30 million from its bond issue in Hong Kong last year. It is reportedly planning a second offering.
Heavy equipment maker Caterpillar followed suit while budget carrier Hong Kong Airlines reportedly said in May that it was also planning a similar issue.
Yuan-related financial products have been booming in Hong Kong, a semi-autonomous Chinese territory that has been acting as a test bed for Beijing's ambitious goal to make the unit a global currency.
Tesco is the world's third-largest retail group after US-based Wal-Mart and France's Carrefour, both of which have important operations in a booming China, where a growing middle class provides a market for Western style shopping.
The British group operates about 100 hypermarkets and malls in China, and said earlier this year that it will set up a joint venture with Asian investors to develop shopping malls in China.
© 2011 AFP