Foreign investors active in bidding Renault, Dorsett dim sum bonds

HONG KONG, March 27 Tue Mar 26, 2013 11:47pm EDT

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HONG KONG, March 27 (Reuters) - Foreign investors were active in offshore yuan bond issuance this week, with 45 percent of Renault's dim sum bond allocating to investors outside of Hong Kong, according to a term sheet seen by Reuters on Wednesday.

The French automaker sold a three-year senior unsecured yuan bond at 4.65 percent, raising 750 million yuan ($120.8 million). Total orders exceeded 1.2 billion yuan from 60 investors.

Hong Kong investors accounted for 55 percent, followed by Singapore at 24 percent, Switzerland at 8 percent, other parts of Europe at 9 percent and other parts of Asia at 4 percent, the term sheet showed.

Fund managers and private banks swallowed the biggest part of the transaction at 62 percent and 24 percent, respectively. The rest went to banks (8 percent), hedge funds (3 percent) and other investors (3 percent).

Renault sold a 750 million yuan two-year dim sum bond last October with a coupon of 5.625 percent and later reopened it to bring the total size to 1.25 billion yuan.

HSBC and Industrial and Commercial Bank of China (Asia) are joint bookrunners.

In a deal priced a day earlier, Dorsett Hospitality International, a subsidiary of Far East Consortium International, sold a 850 million yuan five-year dim sum bond at 6 percent.

The unrated bond attracted 2.7 billion yuan from 80 accounts. Singapore investors took 38 percent, following Hong Kong accounts' 53 percent.

Market participants say yuan assets remain attractive to global investors in a low-interest rate environment, given the relatively strong performance of the yuan and dim sum bond market.

Yield-hungry investors are moving to the offshore yuan bond market in search of higher returns, flocking to three high-yield bonds issued in the past week which were all priced higher to yield lower than initial guidance due to strong demand.

The total return on dim sum bonds has been rising since the beginning of 2012 where it stood at the 100 area and it reached 105 on Wednesday, according to HSBC statistics. ($1 = 6.2110 Chinese yuan) (Reporting by Michelle Chen; Editing by Eric Meijer)

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