China

The offshore renminbi market will see more commercial paper (CP) issuance, especially from multinationals seeking to diversify short-term funding, believes Goldman Sachs.

2012 is shaping up to be the most significant year for the offshore renminbi bond market, even if the numbers don’t indicate it.

With regulatory easing on the horizon, foreigners prepare for greater investment into China’s interbank bond market as the emphasis onshore shifts from equities to fixed income.

Highly rated corporations continue to issue unrated debt in the dim sum bond market. This is stifling liquidity and will likely ultimately hinder the market’s development.

Beijing target Rmb2 billion of its upcoming batch of dim sum bonds to central banks as its looks for to boost overseas reserves of its currency.

South Korean lenders Shinhan Bank, Woori Bank and Hana Bank are planning to issue Samurai bonds next month, hoping to cash in on the continued demand for Korean credits in the Japanese market, funding officials told EuroWeek Asia.

Agricultural Development Bank of China raised Rmb3bn ($471m) from a three-tranche offshore renminbi bond last week, using strong anchor demand to price the deal inside or at worst flat to its existing curve. But some investors complained about the tight pricing, and pulled their orders.

China’s Ministry of Finance is planning to sell a Rmb1bn 15 year tranche as part of its Rmb23bn ($3.6bn) offshore renminbi bond offering at the end of the month, the first time it has issued in the maturity. That could lead to a boost in longer-dated issuance, said bankers and investors.

The quantity of dim sum bonds has disappointed so far in 2012, but quality has not, say dealers.

The HKMA is expected accelerate measures to improve liquidity in the offshore renminbi (CNH) market after the announcing two new developments which should aid the development of the repo market.

The Chinese currency has been imitating the movements of other Asian currencies since the beginning of the year in a reversal of recent trends, says the French bank.

The former HKMA head who has championed the island’s 29-year-old peg against the US dollar is now calling for a currency review. But change will be hard to come by for the foreseeable future.