Dim sum bonds are bonds issued outside of China but denominated in Chinese renminbi, rather than the local currency. They are named after dim sum, a popular style of cuisine in southern China.[1]

History and use

The first dim sum bond was issued by the China Development Bank in July 2007.[2] Until July 2010, only Chinese and Hong Kong banks could issue renminbi-denominated bonds;[1] deregulation led to the development of an offshore market in renminbi and the internationalization of dim sum bonds.[3] The bonds became more popular as foreign companies sought yuan-denominated assets as the renminbi appreciated in 2011. Although the major market for dim sum bonds is Hong Kong, China Construction Bank became the first Chinese Bank to issue a renminbi denominated bond in London in November, 2012. This followed similar issues by non-Chinese banks like ANZ, HSBC and Banco do Brasil earlier in the year.

35.7 billion yuan in dim sum bonds were issued in 2010 and 131 billion in 2011.[4]

The first foreign-issued dim sum bond by a nonfinancial company was announced on August 19, 2010 and issued on September 16, 2010 by McDonald's.[1] On 5 November 2013, British Columbia finance minister Mike de Jong reported a successful placement of Chinese RMB$2.5bn in dim sum bonds, listed January 14, 2014 on the Luxembourg Stock Exchange.[5] The issue was five times oversubscribed.

Some Indian companies participate in the dim sum bond market, one of them being IL & FS Transportation networks (a subsidiary of the giant lender IL & FS Financial Services).[6]

See also

Sources

  1. ^ a b c Fion Li (15 November 2011). "'Dim sum bonds' are fueling China's currency rise". The Washington Post.
  2. ^ "CDB to issue 5 bln yuan RMB bond in HK". gov.cn. Archived from the original on 5 July 2008. Retrieved 10 October 2013.
  3. ^ Michael Schuman (15 February 2011). "Is the Chinese yuan becoming a rival to the dollar?". Time.
  4. ^ "Bank of China Beats HSBC as Dim Sum Market Opened: China Credit". Bloomberg Businessweek. 26 October 2011. Archived from the original on October 28, 2011.
  5. ^ Wang Liwei (5 November 2013). "Canadian Province Issues Offshore Yuan-Denominated Bonds". Caixin Online.
  6. ^ Wee, Denise (27 September 2018). "IL&FS Jumps by Record in Dim Sum Bond Market on Hope of Support". Bloomberg Quint. Retrieved 29 September 2018.
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