(Adds more details, debt agency)

BUDAPEST, April 13 (Reuters) - Hungary has mandated the Bank of China Ltd to arrange a yuan-denominated sovereign bond of benchmark size, which would be the first such issue from Central Europe.

The announcement fits into the plans of Prime Minister Viktor Orban’s government, whose efforts to build closer economic ties with China have involved joint projects in finance and infrastructure in the past few years.

The debt agency AKK said in a statement on Wednesday that the bond would be a “dim sum” bond, or an offshore yuan bond issued outside China, and the issue and pricing would depend on market conditions. The AKK declined further comment on the size.

Hungary had penciled in 1 billion euros of foreign currency bonds for 2016, as it plans to refinance most of its foreign currency debt expiries of 4.8 billion euros this year from forint-denominated issuance, the AKK said in December.

The country has not tapped international markets since 2014 as it has shifted its debt refinancing towards forint-denominated papers.

The country already canvassed potential investors on their interest in a possible yuan-denominated sovereign bond in January in a road show, but it did not issue a bond then.

Poland has also met Chinese banks to organise a yuan bond issue worth up to half a billion dollars. It will decide when to tap the market after meeting the Chinese financial regulator in April, Poland’s deputy finance minister said last month.

China’s offshore yuan bond market had its best monthly performance in March, according to indexes, and participants say the near-term outlook is good, given improved offshore yuan liquidity and shortage of supplies in the primary market. (Reporting by Krisztina Than and Sandor Peto; Editing by Tom Heneghan)