Asia Pacific
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Commodity contracts may start to be denominated in renminbi once China allows convertibility of its currency especially as the country is the largest consumer of natural resources.
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The offshore renminbi market is growing and the investor base is alive to new products and new ideas, bankers said this week, in the wake of what they believe to be the first asset-backed dim sum deal. “It’s definitely a positive thing,” said one.
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In this roundup of offshore renminbi news, China’s central bank allows companies to extend cross-border loans, foreign banks get access to Shanghai’s free economic zone, and Canada makes a play to be an offshore RMB hub.
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The rise of offshore renminbi yields as a result of tighter liquidity and limited appreciation is likely to deter issuers from selling dim sum bonds in the second half, says the bank. -
China’s recent money market liquidity squeeze drove some banks offshore to hunt for cash, yet Hong Kong names were reluctant to lend due to the credit risks.
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Asia’s international bond market is not the only one reeling from a jump in yields that has culminated from fears that US Federal Reserve chairman Ben Bernanke is ready to taper quantitative easing.
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Chinese clothing maker Eratat Lifestyle Limited has issued a Rmb134m ($21.7m) bond that was used to back what bankers think is the first asset-backed security issued in the dim sum market. It was a private placement sold on June 21, and allowed investors to lock in sizeable returns that would have been difficult to achieve from a public deal.
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The welfare of Asian economies is highly reliant on China’s outlook, and given that it is the new administration’s first year of power, the nation cannot afford to miss its official growth target, says the bank.
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Dealogic league table of Asian local currency bond transactions.
