China

Ford Motor Co raised Rmb1bn ($158m) from the offshore reniminbi debt market, becoming the first foreign sub-investment grade issuer to sell dim sum bonds.

Offshore renminbi investors are increasingly focused on coupon payments over currency appreciation, amid increasing doubts over the direction of the renminbi against the dollar, according to debt bankers. That proved to be the case for US building equipment company Caterpillar this week: it had to pay more than double the coupon it offered the last time it came to market, in the middle of 2011.

Debt syndicate sources tell Asiamoney PLUS that ongoing renminbi appreciation against the US dollar will continue to make the offshore CNH bond market appealing, though the short-term news of the renminbi’s fair valuation may dampen appetite.

It will take some time for the offshore renminbi debt market to offer the broad range of maturities, structures and credits that issuers can find in more established funding arenas. But market participants have already made big steps forward. It is too easy to underestimate quite how far the market has come.

SBAB Bank has reaped the rewards of its investor relations effort in Japan in 2011 after printing a trio of Uridashi deals — its first issuance in the format for several years — as the firm became the latest to diversify its investor base through non-public deals.

China’s offshore dim sum bond market has attracted issuers from new geographies in recent months, but global and regional sovereigns still stay away – though investment and government insiders hope this will change.

A modest reduction in CNH deposits in the last few months does not represent a funding or liquidity concern for Hong Kong banks due to their investment and regulatory limitations, says the rating agency.

The offshore renminbi market remains a long way from gaining a credible fixing rate which will hamper the development of syndicated loans, say bankers.

South Korea’s Shinhan Bank is planning to raise around $500m more from Asian bond markets this year, after selling its first ever offshore renminbi bonds last week.

The Middle East’s first offshore renminbi bond issuer, Emirates NBD, has strengthened its investor base, diversified its capital and positioned itself for a strong future in the Chinese market.

Singapore Telecom priced $700m of bonds without paying any new issue premium to its existing bonds last week.