CNH Tracker-Chinese companies flock to offshore markets for funds

Wed Jan 8, 2014 11:16pm EST

By Michelle Chen
    HONG KONG, Jan 9 (Reuters) - Chinese companies flocked to
offshore markets for funds immediately after the New Year
holidays to take advantage of relatively sufficient liquidity at
the start of the year and increased bets on yuan appreciation.
    The boom in the primary market also comes at a time when
more than half of the outstanding amount of dim sum debt is set
to mature this year, the highest level since the market came
into being in 2007.    
    The expected heavy dim sum supply is likely to pressure the
offshore yuan bond yield curve higher, which in turn may push
some yuan bond issuers to the dollar bond market for
alternatives.
    China Export-Import Bank (Chexim) is planning to issue up to
4 billion yuan ($661.03 million) bonds in Hong Kong to
institutional investors. Agricultural Development Bank of China,
China Electronics and Peking University Founder Group are also
in the market to sell yuan bonds.
    Analysts say it makes sense for companies to collect funds
early in the year before concerns over quickly mounting local
government debt and risks related to financial market reforms in
China worsen.
    The onshore market does not look appealing to raise funds at
present with elevated money rates after two cash crunches
engineered by the central bank last year. The ongoing interest
rate reform is poised to further increase domestic funding
costs.
    Liquidity in China is expected to remain tight as the
People's Bank of China is determined to make banks deleverage
their interbank business to assure sustainable economic growth.
As a result, more mainland companies may tap offshore funding
pools.
    Some issuers are capitalising on dollar debt market for
bigger bond sizes and better liquidity. Chinese property firms
Kaisa and R&F Properties kicked off the emerging market issuance
of dollar bonds on Monday.    
    "RECENT STORIES:
CNH Tracker-Heavy dim sum supply seen next year on refinancing
pressure 
    
More stories about the CNH market                 
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Offshore yuan rate    Onshore yuan rate  
Offshore yuan dealt Onshore yuan on CFETS 
  
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