Bonds resume trajectory after summer siesta

The year so far in bonds could be described this way: busy, busy, dead, busy. The first five months of the year were highly active, only for issuance volumes to get shoved off a cliff in late May by tapering talk, and only then for bond volumes to make a big September recovery.

Hong Kong/mainland credit markets are heading towards a record year, and this despite a three-month summer shutdown. One big factor drives issuance: opportunism. Issuers see that interest rates in US dollars, while still low, are heading up, and they are pushing out as much issuance as they can to lock in low fixed rates.

"Borrowers see that long-term interest rates are still at a bottom, and they are taking advantage of that fact," said Frank Kwong, head of Asia-Pacific fixed-income syndicate at BNP Paribas.

To give that some context, mainland firms in recent years could be counted on to issue each year about US$10 billion to US$15 billion of bonds in offshore markets.

In 2012 such firms issued about US$80 billion offshore, and this year they are on track to raise US$100 billion, predicts Yves Jacob, Asia-Pacific head of debt capital markets at Societe Generale.

The dim sum bond market is exploding. The instrument offers mainland issuers all the advantages of offshore capital but in yuan - and this market is also heading for another record.