(File photo)

South Korea is about to issue bonds for the foreign exchange stabilization fund denominated in Chinese yuan in Chinese mainland, said a person close to the Ministry of Strategy and Finance of South Korea on Nov. 30.

The report, made to South Korea’s Yonhap News Agency, said that the South Korean government hopes to get approval from the People’s Bank of China to issue yuan-denominated sovereign debt in China in mid-December.

With respect to the issue date and expiration date, the report said: "The South Korean government will make the decision after they assess conditions of the financial market in the country."

The total sum of the bonds is estimated to be around USD 517 million.

Analysts believe that South Korea aims to expand its reserve of Chinese yuan and to increase the yuan's proportion in South Korea’s foreign reserve by issuing sovereign bonds in Chinese mainland.

Furthermore, by doing so, the South Korean government hopes to widen the financing channel for its enterprises and pave way for enterprises to issue yuan-denominated bonds in China in the future.

In the past, Chinese mainland-based South Korean enterprises can only raise yuan in the bonds market in Hong Kong and Taiwan.

If South Korea manages to issue its bonds in China, this will be the first time for a foreign country to issue sovereign bonds in the mainland.