INDUSTRIAL & Commercial Bank of China (ICBC) is marketing the largest sale of offshore yuan bonds as China pushes for the wider use of its currency as an alternative to the U.S. dollar in business and finance.

    ICBC, China’s biggest lender by market value, is offering as much as 12 billion yuan (US$1.95 billion) in perpetual notes, sources familiar with the matter said yesterday. It’s one part of a three-part US$5.7 billion sale.

    China, Asia’s biggest economy, has been approving yuan clearing hubs across the world to pave the way for the liberalization of its currency and capital markets. The yuan ranked seventh for usage in global payments in September, accounting for 1.72 percent of all transactions, a record share, the Society for Worldwide International Financial Telecommunications said in a statement posted on its website Oct. 30.

    China “could be setting a benchmark in the offshore yuan space and it fits in with its overall currency internationalization,” said Matthew Phan, a Singapore-based analyst at independent research firm CreditSights Inc. “Once this deal is done, there could be more Basel III bonds in that market from other Chinese banks.”

    ICBC’s yuan notes can be redeemed in five years and are being marketed to investors at a yield of about 6 percent to 6.25 percent, said the sources.

    ICBC is also marketing perpetual securities callable in five and seven years respectively in dollars and euro, both with the same yield guidance, the sources said. The dollar tranche may be as much as US$2.95 billion while the euro portion could be as much as 600 million euros (US$743 million).

    The potential US$5.7 billion transaction comes after Bank of China Ltd.’s US$6.5 billion sale of offshore additional Tier 1 notes in October. That issue was the biggest-ever single tranche U.S. dollar bank capital sale. It was denominated in yuan, although settled in dollars at a rate established the day the notes priced. (SD-Agencies)