GROWING APPETITE FOR DIM SUM
Securities may appeal to buyers still leery of China’s capital controls on the mainland
ASIA’S appetite for bonds is so big it even has a little space left over for Dim Sum. Offshore yuan-denominated bonds, known as Dim Sum, became a lot less sought after in 2015, when a shock yuan devaluation rattled global markets and shattered the long-held view that China’s currency was headed ever higher. Dim Sum issuance collapsed, with even China’s Ministry of Finance cutting back sales.
Now that the yuan was on the rise again, the Dim Sum market was coming back to life. Issuance so far this year stood at 20 billion yuan (RM12.6 billion), less than a tenth of the peak of 228 billion in 2014, but analysts anticipate sales to grow even as the onshore Panda Bond market also expands, thanks to a new trading connection with Hong Kong.
Dim Sum securities could appeal to buyers still leery of China’s capital controls on the mainland.
“We expect a resurrection of Dim Sum from the steam cooker,” said Iris Pang, an economist at ING Groep NV in Hong Kong.
“Potential demand comes from the expectation of yuan appreciation. Such demand might be reluctant about the onshore market, on worries the funds can’t in the end get out of the mainland,” she said.
Recent sales showcased foreign issuers’ interest in the market: BMW Finance and BOC Aviation Ltd both priced a threeyear bond on Wednesday. Royal Bank of Canada raised 900 million yuan from a three-year bond while National Bank of Canada followed with its own three-year notes.
The Philippines was also exploring a potential issue, following a Panda bond sale. Bloomberg