China

While China ECM bankers were lapping up this week’s overhaul of the country’s rules governing IPOs, it was DCM bankers that were salivating over another element of the announced changes — a pilot programme allowing Chinese listed and unlisted companies to issue preference shares for the first time.

Even as corporates are given more freedom to conduct cross-border business from Shanghai’s Free Trade Zone, treasurers remain hesitant to set up shop so long as their mainland cash pool is segregated from their operations in the pilot zone.

Far East Horizon returned to the offshore renminbi bond market on Wednesday to print a Rmb700m ($114m) three year deal. The borrower more than doubled the amount it had intended to raise in response to a strong order book in what could be the last dim sum deal of the year.

Chinese banks have an opportunity to achieve more favourable pricing for their renminbi-denominated bonds sold in Taiwan than bonds sold in Hong Kong, though the window may disappear quickly.

An initiative in which Chinese and Hong Kong-domiciled fund managers can sell products directly into each other’s markets is soon to launch, according to representatives from the CSRC and SFC.

Top 3 Offshore RMB DCM Transactions - 2013 YTD

In this week’s round up of offshore renminbi news, China’s central bank clarifies plans for the Shanghai Free Trade Zone, London gets a clearing service, and the RMB overtakes the euro as a trade currency.

Far East Horizon returned to the offshore renminbi bond market on Wednesday to print a Rmb700m ($114m) three year deal. The borrower more than doubled the amount it had intended to raise in response to a strong order book in what could be the last dim sum deal of the year.

Standard Chartered and the Agricultural Bank of China have been praised for devising a market-led solution to offshore renminbi clearing, yet analysts question if their business will face limitations without the blessing of China’s central bank.

Recent issuers into the dim sum bond market have saved an estimated 20bp-50bp over their US dollar curve, benefitting from investors’ risk-on sentiment as the renminbi continues to outperform other emerging market currencies.