Asia Pacific

Commonwealth Bank of Australia (CBA) is set to meet fixed investors early next month for what looks to be the third Basel III bond from a non-Chinese bank in the offshore renminbi market.

Goldman Sachs is set to list the longest tenor Formosa bond on March 3. The Rmb525m ($84m) 12 year deal, which had a formal pricing date of February 3 but was conducted with very little fanfare and has only just come to the attention of market participants, is also notable for being a zero coupon issue.

The International Monetary Fund (IMF) could give the RMB a much needed credibility boost this year by including it in its special drawing rights (SDR) facility.

DBS's renminbi DRIVE index fell in the last quarter of 2014, according to the latest report from the Singapore-based bank. The index, which tracks the popularity of the currency among Hong Kong corporates, fell to 57.2 from 58.1 in the previous quarter due to poorer business performance.

HSBC’s 2014 results underline the pain the bank has suffered from multiple conduct failures, as it swallowed $3.7bn of fines, settlements, customer redress and provisions through the year.

In this round-up, China cross-border RMB trade settlement falls 12.1% in January, Taiwan RMB deposits keep climbing, Canada is updating market infrastructure to support RMB business, and the Shanghai-Hong Kong Stock Connect celebrates its first three months in operation.

Two important policy developments in the Shanghai Free Trade Zone (FTZ) are set to revolutionise the way in which entities based there can raise funds and transfer them.

Fitch expects Australian borrowers to reduce their issuance of covered bonds by A$1.5bn to about A$16.5bn (€11.7bn) this year compared to last. Assuming just over half of this is conducted in euros, as was the case in 2014, the agency’s forecast is broadly in line with the average estimated by five covered bond analysts in December.

Ever since the launch of the Shanghai-Hong Kong Stock Connect initiative on November 17 last year, there has been market chatter about setting up a similar Through Train to connect debt markets. This week saw Charles Li, the chief executive of Hong Kong Exchanges and Clearing (HKEx), confirm this intention at a media event, but market participants warn that doing so will not be as easy as simply copying the Stock Connect model.

In this round-up, South Korea’s RMB deposits dropped 2.6% in January, Hong Kong RMB clearing activity fell by 8.6%, Xinjiang is set to boost cross border RMB business with Pakistan, and Thailand looks to allow RMB settlement for the trading in local securities.

Standard Chartered reckons the renminbi is poised to take on the yen this year to become the fourth most used payment currency worldwide, after reaching fifth position in December.

No sooner has the Shanghai-Hong Kong Stock Connect got up and running than attention is already turning to the Next Big Thing — the expansion of the scheme into new markets and new asset classes. The fervour is understandable, but premature. Market participants should get to grips with what they have first before lobbying for shiny new toys.