Canada's British Columbia province has completed its sale of yuan-denominated bonds in Hong Kong, the provincial government said on Tuesday.

The deal is the first issue by a foreign government in the yuan offshore market.

The issue, known as a dim sum bond, has a one-year maturity and a 2.25 percent annual return rate. The province has raised 2.5 billion yuan ($410 million) through the issue, the largest deal by a foreign issuer in the yuan-denominated bond market to date.

About 60 percent of the bond was bought by investors from Asia and 40 percent by US investors, with central banks and official institutions grabbing most of it.

Michael de Jong, British Columbia's finance minister, said in Beijing that the province immediately reinvested the funds in secure investment projects, including education, healthcare, transportation and energy resources.

"The investors' strong appetite for the bond has exceeded our expectations," he said.

He added that issuing yuan-denominated bonds is a vote of confidence by British Columbia in the importance and global emerging status of China's currency.

"It reflects the provincial government's desire to promote stronger relations between China, the Province of BC and Canada," he said.

"The internationalization of the yuan also opens new business opportunities for financial institutions in the province in trade finance and wealth management, as well as further development of the province's international financial center," he added.

China is Canada's second-largest trade partner. In the first half of the year, the trade value between the two countries reached $33.5 billion. China is also the ninth-largest foreign direct investor in the country.

Guy Saint-Jacques, Canada's ambassador to China, said that his country's decision to participate in the yuan offshore market sends a strong signal that Canada is willing to deepen ties with China.

"It's a win-win event between the two countries, which can help to diversify investors into the province, and meanwhile tighten the bilateral financial and economic ties," he said.

So far this year, the total issuance of yuan-denominated bonds in offshore markets has reached 215 billion yuan, which has already surpassed last year's amount and is a record high.

Global investors in the yuan-denominated bond market are also becoming increasingly diverse. The main investor types include commercial and private banks, fund managers, insurance companies and corporate treasuries. The largest pool of yuan liquidity remains in Asia, and those investors are important for gauging market interest and price discovery, market observers said.

Ryan Song, managing director and deputy head of Global Markets China at HSBC Holdings, said that as the Chinese currency and capital markets are becoming more open and the yuan's internationalization is accelerating, yuan deposits in overseas markets will continue to rise, which will further increase demand for dim sum bonds.

"We expect that by the end of this year, the total amount of yuan in Hong Kong is likely to reach 1 trillion yuan. The number was 730 billion yuan at the end of September," Song said.

chenjia1@chinadaily.com.cn