Unilever, the European consumer group, and BYD, the Chinese carmaker backed by Warren Buffet, are among the issuers that have raised RMB fund in Hong Kong market through dim sum bond since January.
While the sums involved are still small, the market rapid growth, if maintained, could have big implications for how companies fund themselves, how investors access the RMB, and ultimately for the future of the Chinese economy. Dealmakers say dozens more companies are rushing to issue RMB bonds in Hong Kong because the cost of funding there is ultra-cheep, hundreds of basic points lower than on the Chinese market. Beijing strict capital controls mean that interest rates on RMB debt, as well as the value of the RMB against the dollar, can and do vary dramatically between the mainland and Hong Kong, a special administrative region open to international investors.
The latest development in the waves of Chinese issuances is the treasury bonds. China plans to raise RMB 10 billion (US$ 1.54 billion) in its third sovereign bond issue in Hong Kong as part of Beijing's efforts to make the currency more widely used overseas, a report said 14 July.
China finance ministry has not yet finalized the size of the RMB-denominated bond issue, said on condition of anonymity a person familiar with the ministry. Beijing's previous sovereign bond issues in September 2009 and November 2010 raised respectively RMB 6 billion and RMB 8 billion.
