INTERNATIONAL Finance Corp. (IFC), the private-sector investment arm of the World Bank, has signed an agreement with China’s central bank to invest 12 billion yuan (US$1.98 billion) in the country’s interbank bond market.

    IFC said Friday that the agreement, inked Thursday, will increase its ability to offer yuan-denominated loans to private firms in China.

    “This agreement will significantly expand our ability to offer local-currency financing to support private sector development in China,” Cai Jinyong, IFC’s CEO, said in a statement announcing the agreement.

    IFC was among the earliest foreign institutions to participate in China’s capital markets. In 2005, the corporation became the first foreign issuer of yuan-denominated interbank bonds, known as Panda bonds. In February this year, IFC also issued offshore yuan bonds in Hong Kong, known as Dim Sum bonds.

    IFC used the proceeds of these debt sales to make loans to firms involved in health, finance, and other “key services,” the corporation said.

    Bonds outstanding in China’s interbank bond market, where 94 percent of all bonds trade, reached 27.4 trillion yuan at the end of October, central bank data show. (SD-Agencies)