HONG KONG Jan 6 The Export-Import Bank of China (Chexim) plans to issue up to 4 billion yuan ($660.99 million) of dim sum bonds in Hong Kong to institutional investors, kicking off a strong offshore yuan bond pipeline expected this year.
The bonds will comprise a two-year tranche and a three-year tranche worth of 1 billion yuan, respectively, which may be upsized to 4 billion yuan depending on demand, the bank said in a statement on Monday.
A quota of 300 million yuan for the three-year tenor is reserved for foreign central banks, sovereign institutions and monetary authorities, the bank added.
Offshore yuan bonds saw strong momentum in the primary market at the end of last year due to ample liquidity and lower cost offshore, compared with multi-year high yields in the onshore market.
China's money rates remain elevated as the central bank maintains a tight money stance. The finance ministry's 10 billion yuan five-year bonds were priced at an average yield of 4.47 percent on Monday, the highest yield for that tenor since 1998.
Some companies re-tapped the dim sum market earlier for refinancing needs to avoid a possible liquidity squeeze in Hong Kong's yuan market, given that more than half of the 560 billion yuan outstanding dim sum bonds will mature this year.
The Export-Import Bank of China said its yuan bonds will be sold via the CMU bidding platform of the Hong Kong Monetary Authority.
Bank of Communications Hong Kong branch will be the issuing and lodging agent for the deal.
Analysts forecast gross dim sum bond issuance volume to reach around 550 billion yuan in 2014, representing a more than 50 percent increase from last year's 360 billion yuan.