McDonald’s Sells Yuan-Denominated Bonds in Hong Kong

Source: Bloomberg By Shelley Smith and Henry Sanderson

Aug. 19 (Bloomberg) -- McDonald’s Corp., the world’s largest restaurant chain, became the first foreign non-financial company to sell yuan-denominated bonds in Hong Kong.

McDonald’s, based in Oak Brook, Illinois, sold 200 million yuan ($29 million) of 3 percent notes due in September 2013, offer manager Standard Chartered Plc said in an e-mailed statement today.

The issue “opens up more potential issuers to tap this market, especially those who have sizable operations in China,” said Arthur Lau, a Hong-based fixed-income fund manager at JF Asset Management Ltd.

China is expanding its financial system, and will use Hong Kong as a testing ground for yuan-denominated products, according to the city’s former central bank chief Joseph Yam. Foreign companies in February became eligible to issue yuan bonds as part of efforts to bolster the ex-British colony’s financial status and expand its role in promoting China’s currency for global commerce.

Bank of East Asia Ltd. and HSBC Holding Plc’s China unit sold yuan bonds in Hong Kong in 2009, becoming the first non- China banks to do so, according to data compiled by Bloomberg. Hopewell Highway Infrastructure Ltd., controlled by Hong Kong billionaire Gordon Wu, was the first non-financial company to enter the market when it issued 1.38 billion yuan of 2.98 percent notes in July, the data show.

China Growth

Hopewell’s bonds were last quoted at a 2.868 percent yield, according to Hong Kong Treasury Markets Association prices.

Wal-Mart Stores Inc., the world’s largest retailer, said in March that it may sell yuan bonds in Hong Kong. An issue would underscore the company’s commitment to support local communities and China’s financial system, Asia Chief Executive Officer Scott Price said in an interview.

China opened its first 1,000 McDonald’s restaurants faster than any other country outside the U.S. and is the company’s main focus for investment in the region, Tim Fenton, president for Asia, Middle East and Africa, said in a June 10 interview.

The fast-food chain plans to almost double its China outlets to 2,000 by 2013, he said.

McDonald’s sold its bonds in a private placement to Hong Kong institutional and professional investors, it said in a separate statement today. Money raised will provide working capital for expansion in China, where it will open as many as 175 restaurants this year, according to the statement.