Japanese lender MUFG Bank has obtained bond settlement agent license from the People’s Bank of China (PBOC) to operate in the country’s interbank bond market, Nikkei reported.

MUFG Bank has become the first lender of Japan and the eighth overseas bank to receive this license in China.

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MUFG will act as a bond settlement agent for overseas investors, who are required to use transaction agents to trade directly in mainland China’s bond market.

With an account in MUFG Bank, Japanese investors will be able to conduct transactions on government bonds and bank debentures with Chinese investors in Japanese, the news publication reported.

Earlier, the Japanese investors had to face the hurdle of going through overseas banks for prior registration and provide buy and sell instructions in a foreign language.

Japanese investors mostly carried out the bond trades via Hong Kong-based Bond Connect.

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MUFG Bank intends to provide its services to long-term investors, including life insurers and pension funds, and boost their investments in mainland China.

In the Chinese bond market, the outstanding investment by overseas investors stands at around $325bn, out of which Japanese investors hold about $14.09bn.

Earlier this month, Japan’s Sumitomo Mitsui Banking announced the issuance of yuan-denominated “panda” bonds in China.

Nikkei reported that the authorities in China are intending to help the market stabilise amid uncertainties due to new Covid-19 infections and increasing trade tensions between US and China.