China

A London market for offshore renminbi is still no more than nascent. But HSBC’s carefully choreographed Rmb2bn deal this week, the first to be executed in London, has been hailed even by rivals as an important step in the development of the asset class. Whether it will help the City to be a “bridge between East and West”, in the words of UK chancellor George Osborne, remains to be seen. But as Katie Llanos-Small writes, the prospects look strong.

Banks - from both the West and China - are poised to be the first issuers of dim sum bonds in London, signifying their support for London and their desire to get into the market early.

Fund managers consider borrower quality and bond yields to be the paramount considerations for buying offshore renminbi debt, and they believe the currency will keep appreciating in the long-term.

South Korean lender Hana Bank may tap the Japanese bond market in the second half of this year to complete its funding requirement, following a successful $500m transaction on Wednesday.

International companies look likely to account for a large amount of offshore renminbi debt issuance in the coming months as companies seek to raise renminbi funds at competitive rates.

London’s regulatory and geographic advantages – as well as its distance from Beijing – may make it a more enticing centre for offshore renminbi to global investors than Hong Kong.

HSBC is considering turning to the offshore renminbi for the first time, swelling the list of foreign banks in the market. Rival bankers said the big name recognition the bank enjoys in Hong Kong means it will have little trouble generating demand for the bond.

ICBC (Asia)’s Peter Leung explains to Asiamoney PLUS why the favourable window for dim sum bond issuance may have passed, and discusses alternatives for banks looking to raise cash.

Investors will minimise exposure to the onshore renminbi derivatives market after the doubling of the currency’s trading band which is expected to increase volatility, say experts.

Philippine conglomerate SM Investments plans to issue as much as Ps15bn ($350.5m) of bonds to domestic retail accounts, returning to smaller investors for the first time in around three years.

New World China Land raised Rmb1.5bn ($238m) from the sale of three year dim sum bonds last Thursday, returning just two weeks after its debut in the market — and becoming only the third issuer to ever tap a dim sum bond.