HSBC’s persistence, commitment and leadership in developing the offshore renminbi bond market helped many Chinese and international issuers succeed in the face of a challenging backdrop.
The Dim Sum market saw tough conditions in 2013, as widespread doubts over China’s economic sustainability turned many overseas investors away from the renminbi. Despite an uncertain outlook, the CNH bond market came of age this year in several ways, and HSBC had a hand in it throughout. There were more cross-border deals, more longer-tenor offerings and larger average deal sizes.
HSBC also maintained its role as market leader with a 27.4% market share. The bank led 37 of 83 issues that came to market in the review period, not including certificates of deposit and self-led deals. That was more than double the volume of its closest rival.
Notably, the Dim Sum market emerged as a major alternative to the US dollar market for high-yield Chinese issuers this year, with a flurry of new issues from the PRC property sector.
HSBC opened that sector in January with a Rmb3bn (US$482m) 8.5% five-year bond for New World China, the largest single-tranche corporate transaction in the CNH market in two years. Greentown, Kaisa, Lai Fung and Yanlord followed with sizable deals, totalling Rmb2bn in April and May.
During IFR’s review period, HSBC led nine of the 10 junk-rated deals from Chinese issuers totalling Rmb16bn, a record number.
Most of those high-yield Dim Sum offerings started as US dollar mandates, but HSBC moved its clients to the CNH market when it became clear they could achieve savings over the cost of US dollar funding.
International issuers also had confidence in HSBC, as the bank handled 19 of 46 international Dim Sum deals, including offerings for returning issuers, such as BP, Caterpillar and World Bank.
In September, French debutant Total entrusted HSBC with the first publicly syndicated CNH bond since mid-June. At Aa1/AA, the highest-rated cross-border corporate issue in the CNH market revived the Dim Sum market and set a path for other foreign-related offerings, including BP’s Rmb1.2bn five-year deal in October.
Another eye-catching credential was the Rmb2.5bn debut of the Canadian province of British Columbia with the first Dim Sum bond from a foreign regional government and the largest from a Triple A rated issuer. HSBC was sole lead.
As competition intensified among cities for a piece of the offshore renminbi pie, HSBC kept pace with a Rmb500m Singapore-targeted offering in May 2013, strengthening its claim to be the market leader beyond its Hong Kong base.
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