Greater China

More European banks are set to issue dim sum bonds as favourable swap rates provide an incentive for the lenders to tap the market now, allowing them to fund their plans to expand into China.

Société Générale returned to the offshore renminbi market on Thursday, printing a Rmb500m transaction that took advantage of attractive funding levels.

The Hong Kong dollar’s fate could potentially echo that of the Macanese pataca in 10 years time, especially as China’s continues to gradually relax its controls on the renminbi.

Foreign issuers can only go so far in pushing growth in the dim sum market and China’s MoF and mainland SOEs must take primary responsibility if the market is to succeed, says S&P.

Export-Import Bank of Korea has no plans to use its remaining limit in the Thai baht market, despite having permission to raise Bt6.5bn ($207.4m) more in currency, said a funding official.

ABN Amro plans to become a regular issuer in Asia, its treasurer has told EuroWeek, after the bank made its offshore renminbi debut and announced a tier two focused roadshow in the region.

Top 3 Offshore RMB DCM Transactions - 2012 YTD

The dim sum market is poised to see its first covenant breach – which is easily one of the most positive developments in the offshore renminbi bond market in 2012.

Hyundai Capital Services raised Rmb500m ($78.65m) from its first foray into the dim sum bond market last week, and is now considering returning for more offshore renminbi deals.

Reports of the first covenant breach within the dim sum market is alerting dealers, issuers and investors to the fact that not all covenants are created equal.

Hong Kong’s deliverable renminbi futures market is unlikely to gain traction in the near-term given the lack of demand for derivatives in Asian currencies and its minimal liquidity, say analysts.