Greater China

Malaysian mobile phone operator Celcom Axiata raised MR5bn ($1.6bn) from selling Islamic bonds this week, closing the biggest-ever sukuk with a credit rating in the country’s history.

The relative value of offshore RMB bonds compared to both onshore and US dollar bonds will remain unattractive as downward pressure on Chinese government bonds’ yield curves escalates, says BoA-Merrill.

China’s insurers could have up to US$140 billion to invest into the offshore renminbi (CNH) market if a relaxation of investment rules is expanded to include more foreign assets.

CNH bonds hold appeal for central banks looking for greater renminbi exposure, but broader participation depends on liquidity and a strong pipeline of state-backed bonds.

The country is looking to dim sum bonds as an alternative to fund its capital-hungry infrastructure sector. It’s hoping that quasi-sovereign backing will attract investors to local issuers with weaker credit standings.

Korea Finance Corp is now working on the documentation for a ¥30bn ($382.4m) Samurai bond that it wants to sell in September, but has still not mandated banks to lead the deal. It plans to send out a request for proposals by the end of the month.

The nation’s stringent 75% loan-to-deposit ratio not only puts undue stress on banks’ future earning potential, it diminishes their competitiveness in a burgeoning lending market.

Central banks in Africa will add more renminbi into their foreign reserves in recognition of China’s sound economic fundamentals and as Sino-Africa trade continues to grow, say experts.

Industrial and Commercial Bank of China made its debut in the offshore renminbi debt market this week, raising Rmb1bn ($157m) from a deal that priced inside the outstanding bonds of its rivals, including Bank of China.

Singapore’s DBS Bank turned to its domestic investor base for capital for the second time this year, raising S$1bn ($806m) from the sale of lower tier two subordinated debt.

Dim sum bonds with long tenors should benefit from the convergence between China’s onshore and offshore markets as it relaxes the constraints surrounding its capital account, says HSBC.