China

The bank’s global asset management arm has reduced exposure to Asian local currencies as much as possible across its fixed income funds, but continues to accumulate hedged dim sum debt.

Philippine conglomerate SM Investments Corp (SMIC) is delaying the pricing of up to Ps15bn ($$344.8m) of retail bonds for a week pending regulatory approval for the transaction, its second domestic offering in nine months.

Korea Development Bank has mandated five banks to manage its planned up to ¥50bn ($631m) Samurai bond issue as early as next month, its second deal in Japan in less than a year.

Swedish Export Credit Corp (SEK) returned to the offshore renminbi bond market last week, just four months after its debut, raising Rmb500m ($78.8m) in a deal that paid a premium over the secondary prices of comparable credits.

Foreign corporates with operations on the mainland can borrow in their home currency and use cross-currency swaps into CNH as an alternative to issuing dim sum bonds.

China’s strict controls on CNH liquidity will hamstring London’s offshore renminbi capabilities despite bankers’ best intentions.

Hong Kong’s status as the financial gateway to China would be far from diminished if the offshore and onshore markets merged. In fact, the city could well benefit from the move.

Bond dealers are predicting a strong growth in the dim sum market including the development of longer tenors and more highly structured products.

As the dim sum market evolves, scepticism about currency appreciation and the slowdown of hot money inflows has led to weaker liquidity, says UBS.

The dim sum bond market is expected to remain buoyant for the rest of 2012, despite rising yields due to its strong liquidity, investor base and growing recognition, believes the bank.

China is planning to issue a sovereign bond this summer, which will lead a trend for longer-dated and hybrid dim sum debt, says Barclays.