Asia Pacific

Asia’s dollar markets are now suffering from the indigestion that has long been expected after a feeding frenzy earlier this year. The region’s domestic markets will now have to pick up some of the slack — and local debt liquidity is about to be put to the test.

Chinese regulators are going to allow small and medium-sized enterprises (SMEs) to issue private placements, helping to spur the development of a high yield market on the mainland.

HSBC is offering the first non-US dollar currency trading pairs linked to the offshore renminbi, while the Hong Kong Monetary Authority has relaxed limits on CNH net open positions. Both will boost liquidity.

The bank announced today that it has issued a combined Rmb1 billion (US$158.1 million) euro commercial paper (ECP). The milestone signals the deepening of London’s role as an offshore renminbi hub, say analysts.

Standard Chartered is claiming an industry first after topping Rmb1bn ($158.2m) in outstanding euro commercial paper volume and is positioning itself as the largest issuer of renminbi ECP from London.

Export-Import Bank of Korea (Kexim) plans to revisit the international bond market in the second half of the year, after successfully raising a record ¥100bn ($1.26bn) from issuing Samurai bonds in Japan last week.

Singapore’s hotel operator Banyan Tree raised S$50m ($39m) from the domestic bond market late last week, launching the deal at a time when the European debt worries discouraged other borrowers from selling debt. The absence of any competition helped the firm get tight pricing.

Malaysia is expected to continue to enjoy its status as the global hub for sukuk bonds this year, as domestic and foreign issuers are lured by the country’s lower interest rates and large pool of liquidity.

Eventually the offshore renminbi bond market will have to contend with an unwelcome development: a bond default. Lawyers explain to Asiamoney PLUS what they think would happen when that occurs.

The recent cut in China’s reserve requirement ratio looks like bad news for the offshore renminbi market, pushing down funding costs at home at a time when the dim sum market is looking less and less attractive. But there are reasons to be optimistic about the future of the offshore renminbi debt market.

Ezion Holdings made its debut in the Singapore dollar bond market on Tuesday, selling a S$100m ($79m) deal at the tight end of price guidance. It was the company’s first issue from a S$500m MTN programme — and funding officials are now eyeing the US dollar market for their next issue.