China

The UK showed the enticing possibilities of the offshore renminbi market for sovereigns after it drew more than Rmb5.5bn ($900m) of orders to a debut deal that was priced at the tight end of guidance. Such was the strength of the demand that the sovereign was able to print Rmb3bn — Rmb1bn more than had been expected by market participants.

The UK looks to have laid down a serious marker for other sovereigns wishing to follow it into the offshore renminbi market, with the book on its debut deal over twice subscribed and guidance well inside initial price thoughts as of Tuesday morning London time.

The UK government opened books for its debut renminbi-denominated bonds on October 14. The three year deal was first offered with price guidance in the area of 2.9%, before being cut to 2.75% area in the late afternoon Hong Kong time.

The UK government's landmark RMB bond is grabbing attention this week, but financial market participants are already looking at the next steps, with panda and green bonds seen as possible next areas of focus for Chinese capital account liberalisation, according to HSBC.

China is keen to step up the pace of internationalising the renminbi - and European governments are keen to help. France is preparing to issue a renminbi bond, three banking sources have told Emerging Markets, a sister publication of GlobalRMB. Luxembourg is also considering a deal, one said.

The UK is gearing up to become the first government, apart from China, to sell a renminbi bond, in a deal that could come as soon as next week and be worth Rmb2bn.

Chinese state-owned Bohai Steel Group made its debut in the debt market with a dim sum bond on October 9, and managed to put in a good showing in the secondary market the following day, even though talks of a eurozone recession prompted a fire sale across markets.

Barclays has been forced to pull what would have been the first offshore renminbi bond from a Thai borrower, with investors staying away because of a lack of visibility on the company’s business operations.

In this round-up, RMB clearing in Hong Kong reaches a new record, RMB deposits in Seoul keep surging, two more tests for the Shanghai-Hong Kong Stock Connect are coming up ahead of its launch and Shenzhen is considering its own mutual trading initiative.

Woori Bank (WB) was selling the first locally issued and listed renminbi-denominated bond in Seoul on October 10. The bank’s Rmb200m ($32.6m) two year deal was priced at 3.87%, according to two sources based in Seoul.

Power Construction Corp of China (PowerChina) is meeting investors on October 10 over the possibilities of a US dollar perpetual bond in what could be its second offshore issuance this year.

The UK government on Thursday launched its much-heralded debut RMB denominated bond, the first ever from a sovereign that is not China. The deal is expected to mark a big increase in profile for the Chinese currency among international issuers and investors.