Moody's says offshore renminbi bond market will continue to grow

RMB deposits and trade settlement increase in Hong Kong the push for a "dim sum" growth, denominated in renminbi, is expected to boost the renminbi's demand for "composite" renminbi bonds denominated in dollars, "Caixin" (Wang Duan, the Hong Kong journalist) rating agency, Moody's, January 19, noting that the renminbi is gradually internationalized,　　will contribute to the continued development of renminbi bonds in Hong Kong.　　Guandomin Dominique Gribot-carroz, vice president of Moody's, expects more offshore renminbi bonds to be issued in other financial centres and that Beijing may allow offshore renminbi trading elsewhere.　　In renminbi bonds, if they are settled in renminbi, they are called "dim sum bonds"; if they are settled in other currencies, such as dollars, they are called "synthetic bonds". Guandomin pointed out that the rapid rise in renminbi deposits and trade settlement in Hong Kong has contributed to the growth of "dim sum bonds". The trend has been further catalyzed by the recent Chinese government's allowing Chinese companies to settle foreign direct investment in renminbi.　　However, the market is still at an early stage of development, and its pace and sustainability will depend on the relevant regulatory regulations that are still under development.　　Guandomin said that the "dim sum" of the issuer and the type of distribution presented a variety of, of which the period of corporate bonds is 3 years or less, but as institutional investors increased participation, and thus promote the two-tier market development, the market is expected to be more liquid.　　As of January 14, 2011, the total amount of dim sum notes issued was only RMB 66 billion.　　Zhong, vice president of Moody's, said expectations of a stronger renminbi would push demand for synthetic renminbi bonds denominated in dollars. Zhong said that synthetic renminbi bonds, as an offshore financing channel, may be more favored by some high-yield issuers such as Chinese real estate developers than pure dollar bonds.　　So far, pure dollar bonds are the main offshore financing routes for these issuers. He points out that most developers earn the yuan, but the actual borrowing costs of the dollar's debt depend on the exchange rate when the debt is repaid. "Synthetic renminbi bonds will allow Chinese companies to avoid currency risks and, at the time of issuance, shift the benefits of the renminbi's expected future appreciation to investors, thereby locking down the lower borrowing costs."　　"Zhong said. Moreover, compared with the transfer of the dollar to the mainland, companies that remit their overseas bonds to the mainland often need more complicated government approvals, making synthetic bonds more appealing than dim sum bonds.