HSBC: dim sum debt sales could reach HK$448bn in 2013

Sales of dim sum debt may reach 360 billion yuan (HK$448 billion) next year as China's new leaders encourage use of the yuan in financial centres from London to Taipei, HSBC predicts.

Yuan bond and certificate of deposit issuance outside the mainland will rise from 263 billion yuan in the first 11 months of this year as cross-border trade settlement in the currency increases, HSBC, the leading underwriter of such debt, says.

Yields on dim sum debt have dropped 88 basis points since the end of last year to 4.64 per cent, according to a Bank of America Merrill Lynch index. That compares with an average yield of 2.61 per cent for firms worldwide.

Last week's approval for Bank of China's Taipei branch to clear trades in the currency and China Construction Bank's dim sum debt sale listed in London last month shows regulators are supporting the expansion of the global use of yuan beyond Hong Kong. Singapore, and possibly London, may also be permitted to clear yuan next year, Deutsche Bank analysts wrote last month.

"We're optimistic and are expecting a decent market next year," said Gina Tang, head of debt capital markets for Greater China at HSBC.

"The further growth of the offshore renminbi market and development in other centres including London and Taipei is actually beneficial for Hong Kong, as we will continue to be well positioned as the centre of most of the business."