The Dim Sum market cooled during the review period with volumes down and yields up, but one bank did more than any other arranger to promote the market. For putting offshore renminbi bonds on a far more sustainable footing, HSBC is IFR Asia’s Dim Sum Bond House of the Year.
Making use of its comprehensive Dim Sum bond platform, HSBC excelled across multiple sectors and geographies, leading a wide variety of groundbreaking deals throughout the year and introducing new participants to the market on both the buy- and sell-sides.
The year under review was a period of maturity for the offshore renminbi market. While currency speculators withdrew amid investor worries over China’s economy, the participation of credit funds broadened substantially, allowing issuers to access longer tenors and larger deals.
Of the 31 international issuers that accessed the Dim Sum bond market through public deals during the period under review, HSBC was a bookrunner on 22 of them, including nine as sole lead.
The bank ranked No 1 on the Thomson Reuters league table for Dim Sum bond bookrunners for the 12-month review ending November 15. It garnered a market share of 26.5% from 123 deals, chalking up volumes of Rmb41.9bn (US$6.75bn) – nearly double its nearest rival.
Among the landmark deals, HSBC led American Movil’s Rmb1bn inaugural Dim Sum bond, effectively opening an entirely new market for Latin American issuers. It was also the first renminbi deal to be
SEC-registered, and the February 2012 bond also reopened the Dim Sum market to foreign corporate issuers after a period of inactivity since late November 2011.
Equally eye-catching was the Rmb1bn debut Dim Sum sukuk for Malaysian Axiata, which employed a unique structure utilising the Sharia principle of Wakala. It was also the first rated renminbi-denominated sukuk and the world’s first to use mobile-phone airtime vouchers as its sole underlying assets.
Adding another jewel to the crown for HSBC was its involvement in the jumbo Rmb23bn sovereign issue from China’s Ministry of Finance, where it joined Bank of China as one of only two global co-ordinators on the Hong Kong-targeted retail tranche.
HSBC also played a key role in helping to place some of the bonds with central banks around the world – a small, albeit important, step in the renminbi’s development towards becoming an international reserve currency.
German Government-owned development bank KfW entrusted the bank with its Rmb1bn debut in May, as well as a retap of Rmb500m in July.
Following the reopening, the issue ranks as the largest Triple A rated Dim Sum benchmark, as well as the largest from an SSA issuer outside of Asia.
Despite the shrinking advantages in funding overseas, Chinese issuers kept coming to the offshore renminbi market. Among the nine Chinese banks that issued Dim Sum bonds during the period, six hired HSBC as a bookrunner.
China Development Bank’s Rmb1bn 20-year issue in July was a particular highlight, establishing a complete yield curve for Dim Sum bonds and providing a pricing benchmark for longer-term renminbi financial products in the international capital markets.
Apart from bringing various top-tier Chinese FIGs and state-owned enterprises to the international market, HSBC also escorted a long list of private-sector issuers, including the likes of Gemdale, Huawei and New World China.
Gemdale’s Dim Sum deal was the first international bond offering from an A-share listed company without a guarantee from an onshore entity.
HSBC also underlined its renminbi ambitions with a Rmb2bn trade under its own name in London, specifically targeted for distribution to European investors. The issue helped develop the renminbi investor base with a remarkable 60% distribution to European accounts.
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