China to Buy $50 Bil. of First IMF Bond Issue

China has agreed to buy $50 billion of the International Monetary Fund’s first bond issue in a move that will help to strengthen the body’s lending ability and diversify Beijing’s foreign holdings.

The agreement announced Wednesday by the Washington-based IMF comes as the body tries to raise money to finance lending, especially to developing countries, to help economies weather the global downturn.

“The agreement offers China a safe investment instrument,” said an IMF statement. “It will also boost the Fund’s capacity to help its membership — particularly the developing and emerging market countries — the global financial crisis, and facilitate an early recovery of the global economy.”

The purchase also would give China a new investment vehicle to help diversify its foreign holdings beyond U.S. Treasury bills, in which it keeps a large share of its reserves.

Brazil and Russia have indicated they will buy up to $10 billion of the bonds, the IMF said.

9/3/2009 12:08 AM BEIJING (AP)