Chinese companies may boost dollar-denominated bond sales next month as higher onshore borrowing costs encourage overseas issuance before the Federal Reserve pares stimulus, said UBS, the second-largest arranger. China National Offshore Oil Corp, the nation's biggest offshore energy explorer, might sell dollar securities, sources said this month. Road King Infrastructure would meet global investors this week, a separate source said. Meiya Power sold 2018 dollar notes last week at 4 per cent, less than the average 5.2 per cent yield on onshore top-rated yuan debt with similar maturities. "September is a golden window for Chinese issuers," said Patrick Liu, the head of international debt capital markets at UBS China. "They will probably rush to sell instead of waiting." Chinese companies, which issued a record US$22.8 billion in the second quarter, have since trimmed offerings in the US currency as fund outflows prompted a 0.6 per cent loss since July 1 on dollar notes in Asia. The region's local-currency bonds performed worse, shedding 1.9 per cent. As yuan borrowing costs rise after China's worst cash crunch in at least a decade, companies are again considering offshore issues. That trend may continue even after the Fed begins reducing its note purchases, amid concerns that fundraising costs in China will remain elevated, according to Liu. Policymakers at the US central bank were "broadly comfortable" with chairman Ben Bernanke's plan to start reducing bond buying later this year if the economy improves, with a few saying tapering might be needed soon, minutes of their last meeting released on Wednesday show. The Fed will probably reduce its monthly purchases at its September 17-18 meeting, according to 65 per cent of 48 economists polled in a survey. "Even though offshore liquidity will no longer be excessively loose, given the outlook for onshore liquidity, I don't think the Fed tapering would cause a reduction in offshore dollar bond issuance," Liu said. Total issuance next year might be at the same level as this year, he said. Dollar note sales by mainland and Hong Kong companies total US$46.4 billion so far this year, compared with US$50.5 billion for all of last year. Beijing has tightened money supply since June in an effort to force investors to shift funds out of shadow banking, which allows lenders to bypass controls and capital requirements. The seven-day repurchase rate, a gauge of interbank funding availability, averaged 4.11 per cent in the second half from 3.85 per cent in the previous six months, according to the National Interbank Funding Centre. "Yields are surging in the onshore primary market because of the tight liquidity," said Dong Hui, a bond analyst at China Securities in Beijing. "The weak demand in the onshore market will probably drive more and more companies to try cheaper offshore financings." Rising costs have curbed yuan bond sales on the mainland. Borrowers have issued 173.9 billion yuan (HK$220 billion) of bonds so far this month, against 291 billion yuan last month, set for the least since January last year. The yield on five-year AAA-rated corporate bonds climbed 28 basis points this month to 5.24 per cent, the highest level since November 2011. Rates on investment-grade offshore dollar debt for Chinese companies rose 22 basis points to 4.17 per cent, according to Merrill Lynch indices.