By Peter OBIORA InvestAdvocate

Lagos INVESTADVOCATE)- The International Finance Corporation (IFC) a member of the World Bank Group, Thursday said it will invest about $2.0 billion (12 billion yuan) in China’s interbank bond market.

This is coming on the heels of an agreement between the IFC and People’s Bank of China,   the agreement enables IFC to diversify its financial assets and enhance liquidity management, while increasing the ability to offer renminbi-denominated loans for private sector development in China.

‘’Under the agreement, IFC will invest 12 billion yuan in fixed income instruments in China’s interbank bond market,’’ the IFC said.

According to the IFC, it supports the development of China’s financial sector by working with the government to create a regulatory and legal environment that supports the growth of financial services, promote the microfinance industry, strengthen China’s commercial banks, and develop the country’s financial markets.

Jin-Yong Cai, IFC’s Executive Vice President (EVP) and Chief Executive Officer (CEO) said the agreement will significantly expand the corporation’s ability to offer local-currency financing to support private sector development in China.

“It complements our ongoing efforts to deepen China’s domestic capital markets, a strategic priority for IFC.”  Jin-Yong Cai said.

The IFC has participated in China’s domestic capital markets in a variety of ways, including direct market interventions, for example as the first non-resident issuer of renminbi-denominated bonds, so-called Panda bonds, in 2005. IFC has also issued renminbi-denominated bonds in Hong Kong SAR, so called Dim Sum bonds.

According to Jin-Yong Cai, proceeds of IFC Panda and Dim Sum bonds were invested in companies that focus on health, financial, and other key services. ‘’To increase its ability to offer long-term, renminbi-denominated loans, IFC has also signed Master Swap Agreements with China Development Bank and China’s Export-Import Bank,’’ Jin-Yong Cai said.

In China, IFC also focuses on private sector investments that help fight climate change, enable rural development, and promote sustainable Chinese investments overseas. Since 1985, IFC has invested about $6 billion (around 36 billion yuan) in more than 200 projects in the country, including nearly 3 billion yuan in local-currency investments.