African central banks were given access to yuan-denominated bonds for the first time after a large Chinese lender allocated them a purchase quota of three-year bonds, an important development in the yuan's wider use globally.

China Development Bank Corp, the State-owned lender and a supporter of government projects and Chinese companies looking to expand overseas, set aside part of its three-year dim sum bonds sold on Thursday for African central banks.

That was the first time that African central banks would be able to invest in yuan-denominated bonds.

CDB offered 1 billion yuan ($157 million) of 20-year bonds in Hong Kong, the longest time on record for the market denominated by short-term debt, at a yield of 4.3 percent, and 1.5 billion yuan of three-year notes at a yield of 2.95 percent.

Investors from Europe, the Middle East, and Africa purchased 60 percent of the bonds, said Gao Jian, vice-president of CDB.

The bank declined to reveal how much African central banks have invested in the bonds, but a source close to the matter said that the central banks of Nigeria and Tanzania had made the biggest purchase among their African counterparts.

"The allocation to African central banks is a reflection of the latest trend in the currency reserve strategies of some African nations, which have started to include the renminbi into their foreign exchange reserve portfolios," said Fan Bing, the managing director at Standard Bank China.

The South Africa-based Standard Bank Plc's allocation for the three-year bond was the highest among all the seven joint book-runners.

The six other bond sale managers are Bank of China Ltd (Hong Kong), Bank of Communications Co Ltd, Barclays Plc, HSBC Holdings Plc, Industrial & Commercial Bank of China Asia Ltd and Standard Chartered Plc.

"This bolsters two-way capital flows between China and Africa, and marks an important step in the renminbi's road to becoming a global reserve currency, which is an important element in the internationalization of the currency," Fan added.

Turmoil in US and European debt markets has made it necessary for African countries to quickly begin moving some of their reserves away from more traditional currencies, said Babacar Ndiaye, former president of the African Development Bank.

Li Dongrong, the vice-governor of the People's Bank of China, pledged earlier this month to promote the yuan's use in settling trade and investment with Africa, and encourage African central banks to hold more yuan assets.

"The internationalization of the renminbi is inevitable, and Africa - more than anywhere else - is a fertile market offering better opportunities for the Chinese currency," Fan said.

In 2011, 36 billion yuan worth of trade was done in yuan, according to Jeremy Stevens, an economist at the Standard Bank.

Chinese central bank figures showed that yuan-denominated settlement between China and some African countries has already started, and 4.3 billion yuan worth of settlement was done with South Africa and 2.3 trillion yuan with Mauritius, for instance.

"More African central banks will include the currency in their foreign reserve portfolios, and in five years about 20 percent of African central banks' foreign reserve portfolio would be yuan assets," said Millison Narh, the second vice-governor of the Bank of Ghana.

In September, the Nigerian central bank announced it expected to turn 5 to 10 percent of its foreign exchange reserves into yuan assets to diversify its reserve basket and further strengthen strategic cooperation with China, making it the first African country to take the step.

CDB sold 15-year dim sum bonds worth 2.5 billion yuan earlier in January.

After the latest issuance, CDB has now sold 19 billion yuan bonds in Hong Kong, the biggest sum among mainland financial institutions.

[email protected]