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DBS Sets Sights on Dim Sum Bonds as Millionaire Grip Grows

DBS Sets Its Sights on Dim Sum Debt as Millionaire Grip Grows
Pedestrians walk past a DBS Group Holdings Ltd. bank branch in Singapore. Photographer: Munshi Ahmed/Bloomberg

DBS Group Holdings Ltd., the Southeast Asian bank which wants to manage more millionaires’ money, has its sights set on becoming a bigger player in the Dim Sum bond market.

The Singapore-based lender is this year’s fourth-biggest arranger of offshore yuan-denominated notes, pushing Agricultural Bank of China Ltd. out of the top 10 for the first time since 2010. It’s helped to arrange 7.4 percent of sales since Dec. 31, compared with 3.1 percent in 2013, when it ranked 10th, Bloomberg-compiled data show.

“Most issuers we bring to the market we also have a lending relationship with,” Clifford Lee, the bank’s Singapore-based head of fixed income said during a press briefing in Hong Kong yesterday. “Our approach to climbing up the league table, and hopefully staying among the top five or six, is essentially to couple our balance sheet with an execution capability that can rival the best in the market.”

Bond sales in the Chinese currency outside of the mainland total 151.6 billion yuan ($24.5 billion) this year, 71 percent more than in the first quarter of 2013, data compiled by Bloomberg show. DBS has helped to arrange 11.2 billion yuan of offerings, including China Eastern Airlines Corp.’s 2.5 billion yuan 4.8 percent issue this month and Gemdale Corp.’s 1.05 billion yuan 6.5 percent sale in February.

Not Rockefellers

Gemdale, a residential developer based in Shenzhen, sold 25 percent of its debt to private banks on Feb. 25, a person familiar with the matter said at the time. DBS agreed to buy Societe Generale SA’s Asian private banking business this week in a $220 million deal that will boost its high-net-worth assets under management by more than 20 percent, according to a March 17 statement.

“We know Asian investors’ mentality,” Lee said. “These aren’t European ultra high net worth, they aren’t the U.S. Rockefeller descendants that are so well acquainted with the market they punt it. These are people that have just stepped into the market and they’re using this as a cash substitute.”

Yuan deposits in Singapore have risen from about 142 billion yuan in the middle of last year to about 200 billion yuan currently, Lee said. That compares with some 893 billion yuan in Hong Kong as of January, according to figures from the city’s monetary authority.

The average yield on offshore yuan-denominated bonds sold by corporates rose to 4.63 percent yesterday, the most since October, according to HSBC Holdings Plc indexes.

Maoye International Holdings Ltd., a Shenzhen-based department store operator, postponed a planned offering of Dim Sum bonds today, three people familiar with the matter said. The company was marketing the three-year notes at about 7.25 percent, a person with knowledge of the details said earlier this week. DBS wasn’t managing that sale.

DBS may also help more companies from Southeast Asia access the offshore yuan market. The bank, Southeast Asia’s largest, was the fifth-biggest arranger of loans in Asia outside Japan last year and dominates its home market, ranking no. 1 for loans in Singapore the last three years running.

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