China

The renminbi fell behind the Swiss franc in terms of share of global payments in April, according to SWIFT’s RMB tracker. The Chinese currency is now the seventh most used global payment currency, accounting for only 1.6% of all payments.

Market watchers expect spreads on Chinese bonds to widen in the near term because of Moody's downgrade of the sovereign, but there is little concern that the country’s offshore debt issuers will be hit hard.

China Construction Bank sold its first floating rate bond in 20 years this week, pricing in line with its peers while also printing one of the largest deals since 2014. Its rarity value and a quiet primary market worked in its favour.

China Citic Bank International issued its first Panda bond this week, pricing a Rmb3bn ($437m) three year. The proceeds will remain onshore, but it is understood the deal will help meet the borrower’s funding needs for both the mainland and Hong Kong.

SAIC-GMAC Automotive Finance has made a rapid return to the China auto ABS market with its second deal of 2017. This time around, the firm opted for four tranches with its Rmb4bn ($580m) Rongteng 2017-2 Retail Auto Mortgage Loan Securitization.

Chinese digital map provider NavInfo has signed a €110m loan to fund its acquisition of a stake in a European company.

Moody's downgraded China's credit rating on Wednesday morning. Short swaps were well bid and the curve flattened as an initial response. However, sources expect risk sentiment to weather the storm and the recent curve steepening trend to extend, writes Deirdre Yeung of Total Derivatives.

China National Chemical Corp (ChemChina) opened books for a senior perpetual non call five bond on Wednesday morning, hitting the market soon after Moody’s downgraded the country’s rating.

The upcoming Bond Connect could open up more hedging tools beyond FX for investors in RMB-denominated assets. However, experts warn the additional scheme will create fresh issues for investors that have already accessed China via older systems — unless the regulators take further harmonisation steps.

Market participants are preparing for a July 1 launch of the Bond Connect, with details slowly emerging on the scheme’s features. Meanwhile, banks are also expecting a June 25 announcement on which institutions will act as Bond Connect market makers, GlobalRMB has learned.

Chinese loan banks are appearing in more and more emerging market loan deals this year, as they race towards the loan market big league, but while their hunger for market share is evident, they're still taking a conservative approach.

Germany's Daimler has rapidly returned to the Panda bond market, pricing a dual-trancher last week. Its deal was followed by China Power New Energy Development Company (CPNE)’s debut green Panda, a rarity in the renminbi market.