McDonald's issues yuan-denominated bond

Fast food giant McDonalds has become the first non-financial foreign company to issue a renminbi-denominated bond.

Offer manager Standard Chartered says the RMB 200m 3% notes, due September 2013, were oversubscribed "multiple times" and sold out within two hours, FT Alpahville reports.

While financial firms have been issuing yuan bonds since 2009, this is the first non-financial corporate to issue since China relaxed restrictions on foreign firms in February.

Ignis head of credit portfolio management Chris Bowie says he understands why companies might be tempted to obtain cheap funding in the Far East. However, he has warned on the dangers of currency risk.

"This is an interesting move because it comes at the same time China is selling US treasuries," Bowie says.

"There is still a lot of political rhetoric in the US about the dollar and yuan exchange rate peg.

"China needs to appreciate its currency and if this happens it will have big ramifications for the companies which have issued in the renminbi."