China

Chinese clothing maker Eratat Lifestyle Limited has issued a Rmb134m ($21.7m) bond that was used to back what bankers think is the first asset-backed security issued in the dim sum market. It was a private placement sold on June 21, and allowed investors to lock in sizeable returns that would have been difficult to achieve from a public deal.

The welfare of Asian economies is highly reliant on China’s outlook, and given that it is the new administration’s first year of power, the nation cannot afford to miss its official growth target, says the bank.

Dealogic league table of Asian local currency bond transactions.

Chinese regulators have played hardball this year on topics ranging from money-market liquidity to bail-outs to export invoicing. After six months of tough lessons, market participants now understand that a new economic regime is in order.

The auto company believes that investor demand in China would support an unsecured panda bond or an asset-backed security, and is waiting for regulators to finalise details before issuing.

In this roundup of offshore renminbi news, Hong Kong’s CNH deposits and trade settlement rise in May, European cities vie for offshore renminbi power, and HSBC hires a cross-border renminbi head.

In this round of recent regulatory news, China approves two foreign banks to sell domestic mutual funds, India softens rules on company share buybacks, Taiwan waives credit rating requirements for companies selling renminbi bonds and Vietnam shifts bond clearing responsibilities to its central bank.

The swap line between the People’s Bank of China and the Bank of England is mostly symbolic, but fits well into London’s plan to become the renminbi centre of Europe, says the City of London.

The Chinese central bank's pledge to provide interbank market liquidity is pumping confidence back into the financial markets, alleviating concern that banks could face a credit crunch at the expense of teaching them the need to curb off-balance sheet lending.