Standard Chartered Plc has surpassed HSBC Holdings Plc as the top underwriter of offshore yuan bonds this year as record issuance is forecast.
Standard Chartered had an 18 percent market share as of today, compared with HSBC’s 17.1 percent, according to a league table compiled by Bloomberg. DBS Group Holdings Ltd. ranked third with a 10.6 percent share. Standard Chartered managed a 1.2 billion yuan ($198 million) certificate of deposit sale for China Construction Bank Corp. of Hong Kong on Feb. 14, data showed.
Sales of Dim Sum bonds may surge past 500 billion yuan for the first time in 2014. HSBC estimates issuance will rise to between 520 billion yuan and 570 billion yuan, while Standard Chartered predicts a minimum 550 billion yuan. HSBC was last year’s No. 1 underwriter for the securities with a 22.2 percent market share, higher than second-ranked Standard Chartered’s 13.3 percent.
Standard Chartered and HSBC both declined to comment as the companies are in silent periods before earning releases.
Dim Sum bond yields may climb this year on increased issuance as Chinese companies seek to tap lower borrowing costs in the offshore market. The yield on three-year AA- notes in Shanghai was 7.77 percent on Feb. 14, 210 basis points higher than similar bonds in Hong Kong. Ratings of AA- or below are equivalent to non-investment grades globally, according to Haitong Securities Co., the nation’s second-largest brokerage.
“As onshore liquidity remains tight, Chinese companies are more willing to tap the offshore market for funding,” said Gordon Tsui, the Hong Kong-based head of Hang Seng Investment Management Ltd.
Shui On Land Ltd., a Hong Kong-listed Chinese developer, is considering a sale of offshore yuan debt, a person familiar with the matter said today. China Citic Bank Co. has also hired arrangers to hold meetings with fixed-income investors on a potential Dim Sum bond sale. The lender won approval from authorities to sell as much as 1.5 billion yuan of notes in Hong Kong, it said in a Feb. 12 statement to Shanghai Stock Exchange.