Dim sum bond sales double as new elite back global yuan

Dim sum bond sales by Chinese borrowers surged to a four-month high in November as the country’s new political elite signalled a commitment to making the yuan a global currency.

Beijing Capital Land, the developer whose shares have risen 94 per cent this year, led a doubling of yuan-denominated debt sales in Hong Kong to 5.5 billion yuan (US$883 million) this month. That’s the most since companies sold almost 6.7 billion yuan in July. Corporate dim sum returned 6.6 per cent this year, compared with a loss of 3.2 per cent last year, while similar- maturity domestic company securities returned 4 per cent, according to Bank of America Merrill Lynch indexes.

Chinese companies increased sales of dim sum notes after the country’s new leaders committed to opening the economy, the yuan strengthened to a 19-year high and borrowing costs fell to the lowest in eight months. Vice Premier Li Keqiang, set to take over as premier in March, pledged last week to liberalize exchange rates, while Party General Secretary Xi Jinping said in his inaugural speech he will open the economy further.

“Supply of dim sum bonds will increase because of the push to internationalise the yuan,” said Wee-Khoon Chong, Asia rates strategist at Societe Generale in Hong Kong. “There isn’t as much of a yuan-appreciation story so investors will be assessing issuers on their merits. On the other hand, there is no depreciation risk.”

Shandong Sale

Shandong International (Hong Kong) Limited, an indirectly wholly owned subsidiary of toll-road operator Shandong Hi-Speed Group sold 1 billion yuan of 5.8 per cent bonds, according to data compiled by Bloomberg.