China's Dim Sum Market Revives With Biggest Sales Since 2016

(Bloomberg) -- China's offshore yuan bond market is having a renaissance as a stubbornly strong currency and improving liquidity overseas spur a surge in issuance.

Dim Sum bonds were almost written off last year as sales plunged to a seven-year low amid increasing competition from Panda bonds (as onshore notes from foreign issuers are known) and dollar-denominated securities. Now the market is heating up, with issuers raising 20.4 billion yuan ($3.2 billion) in March, the most since September 2016, according to data compiled by Bloomberg.

The yuan has jumped 3.8 percent this year, poised for its best quarter in a decade, making assets denominated in the currency more attractive. Concerns the rally would subside have been eased as trade tensions with the U.S. limit room for Chinese policy makers to push the yuan lower. Tighter cash supply onshore is also making overseas borrowing more desirable, according to Frances Cheung, head of Asia macro strategy at Westpac Banking Corp.

"There is hope for the Dim Sum market to become more active this year," Cheung said. "The stability of the yuan and expectation for this to continue renders local currency bonds more attractive to foreign investors."

To contact Bloomberg News staff for this story: Tian Chen in Beijing at tchen259@bloomberg.net.

To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Philip Glamann

©2018 Bloomberg L.P.

With assistance from Tian Chen