China

Foreign companies’ Chinese subsidiaries can put their excess renminbi to work via the establishment of a RMB fund that invests in onshore deals, boosting returns and mobility of the currency, say experts.

Credit enhancement structures for offshore Chinese bond deals are deteriorating both in terms of the quality of the structure itself and the quality of the standalone credit, according to Fidelity.

‘Keepwell’ agreements do not provide full credit substitution benefits like guarantees due to the former’s lack of legal precedence in China, adding an area of uncertainty to dim sum bondholders.

Singaporean commodities company Noble Group raised $400m this week, selling its first senior unsecured bond in almost two years. The company returned to the market with a five year bond, after investors made clear on the road that they were losing their appetite for longer-dated paper.

In this round up of recent offshore renminbi news, the expansion of RQFII, China doubles its swap line with Singapore and a new high for Standard Chartered’s globalisation index.

US-listed 21Vianet is poised to be the first internet company to tap the dim sum bond market, opening the door to other tech firms that may benefit from their scarcity and higher yields.

Chinese internet hosting company 21Vianet Group, which listed in the US two years ago, has now set its sights on the international bond market — and hit the road this week to pitch a mooted Rmb500m-Rmb1bn offshore renminbi bond

China’s recovering domestic economy is making it difficult for policymakers to widen the renminbi trading band, especially as the currency continues to trade toward the lower end, say experts.

The offshore renminbi market will benefit from currency battles as Asian investors seek safety in the Chinese FX and global players increasingly allocate funds to dim sum bonds as a diversification play.