UK Export Finance (UKEF) has added the offshore renminbi (Rmb) to its list of supported currencies as it looks to structure its first Rmb-supported deal.

UKEF has signed a MoU with HSBC and a leading Chinese company to begin structuring its first Rmb-supported deal for capital equipment.

The news was announced by the chancellor George Osborne MP, at the first UK-China Financial Forum in London attended by Chinese premier, Li Keqiang.

Among the first export credit agencies to adopt the currency, the move by UKEF enables it to provide medium and long-term guarantees to support Rmb-denominated transactions in any sector. Rmb is now the second most used currency in trade finance after the US dollar, and one of the 10 most used currencies for payments worldwide.

UKEF expects Rmb transactions initially to fall within the aerospace industry. They will help British exporters such as Airbus and Rolls Royce to gain further access to the Chinese aircraft market and will benefit Chinese buyers by providing them with loans in their local currency, giving them greater financial stability. The Chinese aircraft market, according to aircraft manufacturers, is expected to be worth in excess of US$600bn over the next 20 years. British exporters aiming to win contracts in the wider Chinese aviation industry are also expected to benefit.

David Godfrey, CEO of UKEF, says: “We already support UK exports to China in a variety of sectors but would welcome the opportunity to support more. We have significant capacity to provide cover and by adding the Rmb to our list of supported currencies, we expect to see more activity. Given the growth in infrastructure and civil aviation in China, our support for Rmb financing could significantly increase opportunities for UK exporters.”

“HSBC is a leader in the renminbi market and export finance, and is committed to working with our clients to support their needs as the currency internationalises. The bank is pleased to be able to work with UKEF and our Chinese client in the development of this new financing tool, and we will work together to make this a successful project,” adds Douglas Flint, group chairman of HSBC – UKEF’s partner bank in the Rmb MoU.

GTR understands that the deal has not been completed yet; a UKEF spokesperson told us: “We don’t comment on the detail of deals under negotiation.”