Eximbank offering $700 mln U.S. dlr bond in China

SHANGHAI, Dec 29 (Reuters) The Export-Import Bank of China, a major Chinese overseas borrower, is launching a domestic 0 million U.S. dollar bond as Beijing seeks to cap the growth of its trillion foreign exchange reserves, state media said.

''An expansion of the domestic U.S. dollar bond market will help slow the flow of foreign exchange resources into the fast-growing foreign exchange reserves,'' the Shanghai Securities News said on Friday.

The Export-Import Bank of China (Exim bank) signed an agreement on the bond offer in Beijing on Thursday, the newspaper said, without providing other details on the issue.

This would be the third time this year for the state policy bank to borrow in hard currency in the domestic market. It secured a 0 million syndicated loan in February and 0 million syndicated loan in July, the newspaper said.

The bank did not issue any bonds overseas this year. It raised billion from a global bond offer in 2005, which attracted strong demand from investors.

China Development Bank was the first Chinese financial institution to tap the domestic U.S. dollar bond market with an issue of 0 million in 2003. The market has since grown to .93 billion, including the Eximbank offer, the newspaper said.

Eximbank and China Development Bank are two of the country's three policy banks, which lend in accordance with state directives. The other is Agricultural Development Bank of China.

Eximbank has said it had been trying to shift from its traditional role of providing low-cost credit to domestic exporters by expanding credit for importers, underscoring the government's drive to reduce China's trade surplus.

Reuters SBA VP0640