McDonald’s Raises Yuan As China’s Capital Markets Creak Open

Back in February, China said foreign companies could issue yuan-denominated debt in Hong Kong. The intention was to bolster the Hong Kong market and promote the internationalization of the yuan. Now McDonald’s, the U.S. burger joint group, has become the first non-financial company to do so, raising 200 million yuan ($29 million) via 3% notes due  in Sept. 2013. The money is to be used to open more McDonald’s outlets in China.

Such a small issue is a toe in the water but one being watched closely by other companies. Investors snapped up the issue. For one, 3% is a better rate than a yuan would earn sitting in a deposit account, for another expectations that the yuan will rise against the U.S. dollar makes the issue a currency play. Wal-Mart, the U.S. retailer with extensive operations in China, is said to be weighing an issue, too, with a slew of other companies to come in its wake as Beijing moves steadily to give foreign investors greater access to its capital markets.

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