DEUTSCHE Bank completed its first yuan-denominated bond offering in Taiwan to tap into cheap funding opportunities and needs by retail investors for yuan assets on the island.

Deutsche Bank said yesterday it has raised 1.1 billion yuan (US$179 million) from the issuance of the bond that is spread across two tranches – a three-year bond at 2.45 percent and a five-year callable bond at 2.65 percent.

The bond is listed on the Gre Tai exchange in Taiwan to allow local retail investors to purchase the bond.

The German lender initially planed to sell as much as 2 billion yuan in debt, according to earlier media reports.

"This transaction reflects the strong demand for yuan assets in Taiwan, and points to significant potential for the growth of this market," said Cynthia Chan, head of global markets for Taiwan at Deutsche Bank.

The debt offering by the German lender marked the first yuan-denominated bond issued in Taiwan by a foreign entity.

Taiwan lender Chinatrust Commercial Bank made the debut sale of such debt on the island in March. The debt sales have been dubbed Formosa Bonds.

The yuan bond market in Taiwan is expected to reach 2 billion yuan this year, about one-fifth the size of Hong Kong's Dim Sum bonds when they were launched in 2007, according to earlier reports.

Meanwhile the yuan deposit base will grow to 100 billion yuan by the end of this year, and to 200 billion yuan in the next two to three years, supported by demand from both institutional and retail investors, Deutsche Bank said.