China

Hong Kong-based banks are poised to benefit from added liquidity in the CNH market following policy changes made by the HKMA. However, the bond market may not see much of a short-term upside, analysts say.

Top 3 Offshore RMB DCM Transactions - Last Year Rolling (Jan 18 2011 to Jan 17 2012)

Hong Kong looks set to retain its hold on offshore renminbi business in spite of an agreement this week between the region’s regulators and the UK to set up a co-operative forum.

Financial experts and monetary officials say a greater range of CNH financial products available to investors in Hong Kong is the key to developing the renminbi into a global currency.

Opportunistic issuers are taking of advantage of favourable CNH cross-currency swaps to finance certificates of deposit (CD), this is turn is driving yields higher curbing near term upside, believes HSBC.

Government-owned lenders capital needs could follow China Development Bank in issuing 15-year CNH bonds, but a lack of pricing arbitrage and interested investors will prevent a large number of such deals. Anita Davis reports.

Shui On Development, a unit of Chinese developer Shui On Land, sold S$225m ($174.7m) of three year bonds in Singapore last week.

Yields on offshore renminbi bonds will remain stable in 2012 thanks to robust investor demand in the face of a strong pipeline of deals, say analysts. Anita Davis reports.