China

The People’s Bank of China (PBoC) and the Swiss National Bank (SNB) signed a bilateral currency swap line agreement of up to Rmb150bn ($24.2bn), or Sfr21bn, on July 21 in Beijing. The move marks a further step to Switzerland becoming an renminbi hub in Europe.

Sichuan Development Holding, a Chinese local state-owned enterprise (SOE) wholly owned by the Sichuan government, is set to offer a CNH bond with multiple credit enhancements in what will be the first of its kind in the offshore market. Since the new format needs no issuing quota from China's National Development and Reform Commission (NDRC), bankers reckon it might provide an easier way for other local SOEs to fund from the international market.

A recent first for the Formosa market — the dual Taiwan and Singapore listing of renminbi-denominated bonds from a Taiwanese corporate issuer — may be unlikely to drive a flurry of similar issuance. While some in the market express hope that more issuers will now follow suit, others are much less optimistic, arguing that such a small deal can never set a trend.

China Unicom, which was the first Chinese borrower from the telco sector to access the dim sum market, has returned to the offshore RMB market. The borrower priced a two year offering on July 17.

US-based index provider S&P Dow Jones announced this week that, after a market consultation, it had decided not to include Chinese A-shares in any of its global products. The decision follows similar conclusions reached recently by competitors FTSE and MSCI.

Lai Sun Garment priced a new four year on July 17 and used investor friendly covenants to achieve tighter pricing. The structure proved attractive and the book was nearly five times subscribed.

Credit risk is escalating again in China’s onshore bond market, after Huatong Road & Bridge Group said on Wednesday that there would be “uncertainties” in paying interest and principal on one year commercial paper (CP) that falls due on July 23, because the chairman of the company is assisting with an investigation and has not yet returned.

In this round-up, cross border RMB trade settlement triples on a year on year basis, Safe announces further relaxations for offshore RMB investments through Special Purpose Entities, and Taiwan announces its latest RMB deposit figures.

Lai Sun Garment and China Unicom issued guidance on new dim sum bonds on Thursday.

Institutional investors are set to play a bigger role in China’s A-share market after the country’s regulator changed the approval process for setting up mutual funds into a register-based system.

The development of Frankfurt as an offshore renminbi business hub has leapt ahead in 2014, with the appointment of an official clearing bank, the first offshore RMB bond issues settled and listed in the city and the granting of an RQFII quota of Rmb80bn. Joachim Nagel, member of the executive board of the Deutsche Bundesbank, with responsibility for information technology and markets, talks to GlobalRMB about the progress already seen and his expectations for the future.

A recent memorandum of understanding signed between Bank of China (BoC) and the Japan Exchange Group (JPX) is expected to see the development of an RMB-denominated bond market as well as broader trading and clearing services.