US$49b dim sum bond issues
Source: Bloomberg News |
November 9, 2011, Wednesday
|
Print Edition
Print Edition
YUAN-DENOMINATED bond sales in Hong Kong may climb as much as 35 percent next year as China allows more mainland companies to raise funds in the city, where borrowing costs are cheaper, HSBC Holdings Plc said.
Sales of so-called dim sum bonds will total as much as 310 billion yuan (US$49 billion) from an estimated maximum of 230 billion yuan in 2011, Becky Liu, a strategist at HSBC in Hong Kong, wrote in a report yesterday. HSBC's minimum sales outlook were 180 billion yuan for this year and 260 billion yuan for 2012.
"Bond issuance has been faster than many had expected," Liu wrote. "With domestic liquidity conditions remaining tight and the onshore-offshore interest rate gap remaining wide, the incentive for Chinese companies to raise funding in overseas markets will stay high in the near future."
Dim sum bond sales amount to 136 billion yuan so far this year, compared with the full-year total of 35.7 billion yuan for 2010, according to data compiled by Bloomberg News. HSBC is the top underwriter of the securities in 2011, the data show.
Chinese Vice Premier Li Keqiang pledged in August to allow domestic companies to sell up to 50 billion yuan of dim sum bonds this year. Baosteel Group Corp, China's second-largest steelmaker, will be the first such issuer and has State Council approval to sell 6.5 billion yuan of the notes, the National Development and Reform Commission said on October 20.
The average yield on dim sum bonds was 3.65 percent on Monday, according to the Deutsche Bank Offshore Renminbi Bond Index. The rate for top-rated three-year corporate bonds in Shanghai was 5.18 percent, Chinabond data show.
"Issuers might still be willing to pay a relatively high new issue premium amid competition among similar issuers," Liu wrote. "The increase in supply could face slower deposit growth in the months ahead."
Yuan-denominated savings in Hong Kong may have seen a "sizable decline" last month on weaker investor demand for yuan, HSBC has said.
Sales of so-called dim sum bonds will total as much as 310 billion yuan (US$49 billion) from an estimated maximum of 230 billion yuan in 2011, Becky Liu, a strategist at HSBC in Hong Kong, wrote in a report yesterday. HSBC's minimum sales outlook were 180 billion yuan for this year and 260 billion yuan for 2012.
"Bond issuance has been faster than many had expected," Liu wrote. "With domestic liquidity conditions remaining tight and the onshore-offshore interest rate gap remaining wide, the incentive for Chinese companies to raise funding in overseas markets will stay high in the near future."
Dim sum bond sales amount to 136 billion yuan so far this year, compared with the full-year total of 35.7 billion yuan for 2010, according to data compiled by Bloomberg News. HSBC is the top underwriter of the securities in 2011, the data show.
Chinese Vice Premier Li Keqiang pledged in August to allow domestic companies to sell up to 50 billion yuan of dim sum bonds this year. Baosteel Group Corp, China's second-largest steelmaker, will be the first such issuer and has State Council approval to sell 6.5 billion yuan of the notes, the National Development and Reform Commission said on October 20.
The average yield on dim sum bonds was 3.65 percent on Monday, according to the Deutsche Bank Offshore Renminbi Bond Index. The rate for top-rated three-year corporate bonds in Shanghai was 5.18 percent, Chinabond data show.
"Issuers might still be willing to pay a relatively high new issue premium amid competition among similar issuers," Liu wrote. "The increase in supply could face slower deposit growth in the months ahead."
Yuan-denominated savings in Hong Kong may have seen a "sizable decline" last month on weaker investor demand for yuan, HSBC has said.
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