China Leadership Change May Spur Dim Sum Bonds: Deutsche Bank
China’s change of leadership may spur sales of yuan-denominated bonds by foreign companies if rules on capital are relaxed, Deutsche Bank AG (DBK)’s global head of debt origination, capital markets and treasury solutions said.
German borrowers would be more interested in selling so- called Dim Sum bonds “if it wasn’t so darned difficult to get the money from offshore to onshore,” Hakan Wohlin said while taking part in a panel discussion about European and Chinese trade relations in Hamburg yesterday. “I think there’s a brighter future for moving money onshore.”
China is preparing for a decade under new leadership, with Xi Jinping, appointed chief of the ruling Communist Party earlier this month, set to become president in March and Li Keqiang, the party’s No. 2, in line to replace Wen Jiabao as premier. More liberal policies would increase business for banks as clients would face added currency-related risks, Wohlin said.
“Our view is very positive,” he said. “The new leadership is very keen on moving forward on capital liberalization, interest rate liberalization and foreign exchange flexibility. This is exciting for people who provide those services, but I also think it’s quite healthy we get competition in the interest rate market.”
Issuance of Dim Sum bonds may rise to 200 billion yuan ($32.1 billion) next year from about 160 billion yuan this year- to-date, Wohlin said. Volkswagen AG (VOW) was the last German company to sell yuan-denominated notes in Hong Kong, issuing 1 billion yuan of 3.75 percent securities due 2017 last week, according to data compiled by Bloomberg.