HSBC China first foreign underwriter of fin bonds

HSBC Holdings Plc, Europe's largest lender, said on Tuesday it has become the first foreign bank in China to underwrite yuan-denominated bonds issued by financial institutions, as the market opens further to foreign participation.

HSBC China joined an underwriting group that helped Bank of Shanghai, 8 percent owned by HSBC, raise 5 billion yuan ($731million) by issuing bonds, the bank said.

HSBC and rivals such as Standard Chartered Plc are manoeuvring to capture more business in China's 17 trillion yuan bond market as the country steadily deregulates its financial sector, aiming to build Shanghai into a global financial centre over the next decade.

"There's tremendous growth potential in China's debt capital market" said David Liao, head of global markets at HSBC China.

HSBC has been an underwriter of bonds issued by China's Ministry of Finance since 2004 and is among the 10 largest traders of the ministry's bonds by volume.

China's banking regulator has also said it would allow foreign banks to trade and underwrite bonds in the corporate bond market, which is worth about 2 trillion yuan. (US$1=6.832 Yuan)