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British Columbia Premier Christy Clark, top centre, and Teresa Wat, Minister of International Trade and Minister Responsible for the Asia Pacific Strategy and Multiculturalism, speak at Vancouver International Airport in Richmond, B.C., on Thursday November 21, 2013, before leaving for a trade mission to China, Korea and Japan.

DARRYL DYCK/The Globe and Mail

On her recent trip to China, B.C. Premier Christy Clark mentioned her government's "dim sum bond" to a group of business leaders in a Beijing hotel ballroom – and got a standing ovation.

She was then mobbed for photos.

It was just one part of the warm reception in China for the B.C. government's decision to become the first foreign government to issue a bond denominated in Chinese renminbi, a high-profile move for the province and a milestone for China in the internationalization of the currency. For British Columbia, the move is calculated to increase ties between Canada and China, as well as attract more Chinese investment to the province and Vancouver in particular.

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The "dim sum bond" proved so successful that the province may do it again, said Teresa Wat, B.C.'s International Trade Minister and minister responsible for Asia-Pacific strategy and multiculturalism, who stressed she wasn't speaking for the Finance Minister.

"They feel that British Columbia values Chinese culture," said Ms. Wat, who accompanied the Premier. "It was quite a bold move and we succeeded. There's no reason why we shouldn't continue."

The government originally forecast the bond to raise between half-a-billion and 1-billion renminbi – at a coupon of 2.25 per cent. But the bond proved enormously popular with investors, particularly in China, and quickly raised 2.5-billion renminbi, or about $428-million. Roughly 60 per cent of the investors were from Asia, Ms. Wat said, with the majority of them coming from China.

"Dim sum" bonds denominated in Chinese renminbi, also known as the yuan, have become popular with a variety of companies, from McDonald's to Caterpillar, over the years. But B.C. was the first foreign government issuer and one of the few with a triple-A rating, according to Jason Henderson, head of global banking and markets and treasurer of HSBC Bank Canada, who worked with the government on the deal and went on a roadshow in December, 2012, to gauge investor interest.

"We haven't seen a lot of triple-A names," Mr. Henderson said. Recalling the roadshow, he added: "The overwhelming response was, 'We're looking to diversify our renminbi holdings.'"

This bond issue – which recently won two awards from a pair of investment magazines that focus on capital markets – allows the province to raise its profile and cultivate goodwill in a culture where relationships are key, says Yves Tiberghien, director of the University of British Columbia's Institute of Asian Research. Since 2001, B.C.'s goods exports to China have risen 691 per cent, according to the B.C. government, to roughly $5.75-billion in 2012.

B.C. is hoping to raise its profile in Asia as part of an ambitious plan to sell liquefied natural gas to Asia's booming economies, which would help the Premier slash her province's $62.5-billion debt.

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For China, the B.C. bond is one more step on the road to internationalizing its currency and opening up its financial system. Although the government still strictly controls the yuan, Chinese leaders have been seeking to internationalize the currency since 2010, including allowing Singapore and London to become trading hubs for the Chinese currency, in addition to Hong Kong.

"This plays a pioneering role in the internationalization of the renminbi," Prof. Tiberghien said. "It's a big coup for B.C. to be part of this early."

In Vancouver's Chinese business community, members of which fly frequently across the Pacific, the "dim sum" bond was a welcome addition to deepening relations between the province and Chinese investors.

"This move will put B.C. on the map, and it is very positive for the Chinese people and Chinese investors," said Michael Chen, vice-president of finance at Yukon Zinc Corp. "B.C., and Vancouver in particular, is the gateway to China. I think the B.C. government is trying to build relationships with the Chinese government and the Chinese business community. This is definitely a positive."

Follow me on Twitter: @iainmarlow

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