German state-owned development bank KfW issued the first Renminbi bond in Frankfurt on Tuesday, making another important step to promote Frankfurt as a financial center for RMB.

The bond, with a volume of RMB 1 billion (about 162 million U.S. dollars) and a maturity of 2 years, was priced at 1.375 percent per annum. Commerzbank and Deutsche Bank jointly act as lead managers of the transaction. The bond will be listed in Frankfurt; Clearstream Banking AG, Frankfurt will be responsible for the settlement of the bond.

"The RMB as a new global asset currency attracts increasing demand of respective investors. Especially these investors seek issuers with excellent credit ratings like KfW", said the bank in an announcement.

"The first listing of a RMB bond on the Frankfurt Stock Exchange emphasizes the significance of Frankfurt as a financial center," said Dr. Gunther Braunig, member of KfW's Executive Board and responsible for capital markets, adding that the bank supports the recent initiative to promote Frankfurt as a financial center for RMB, particularly with regards to the potential benefits for the export-oriented small and medium sized enterprises

The placement of the KfW underlines that Frankfurt also wants to play a leading role in the RMB bond business, said Al-Wazir, Minister of Economics of the state Hessen to which Frankfurt belongs ,"I'm sure that now other companies and banks will follow the step by KfW in a timely manner."

KfW already issued RMB bonds in 2012 and 2013 and intends to issue further RMB bonds listed in Frankfurt given a favorable market environment and investor demand, said the announcement.

On 28th March, China and Germany signed a memorandum of understating (MoU) on establishing an RMB clearing and settlement mechanism in Frankfurt, moving the German city closer to becoming an offshore RMB center.