Chinese bonds sold in Hong Kong are scarce

Chinese bonds sold in Hong Kong are scarce, such as banks and fund managers to help manage savings yuan record approaching potential issuers and ask them to offer more renminbi debt.

Hong Kong pool yuan deposits more than doubled to 149 million yuan ($ 21 billion) in the six months to September, according to the monetary authority of the island. The amount compares with less than 41 billion yuan of bonds sum so called weak.

The demand for debt is reducing borrowing costs for issuers of China at a time when the central bank is raising interest rates to fight inflation and bonds fall in most emerging nations. The performance of China's one-year Treasury bonds in the offshore market fell 26 basis points over the past three months to 1.48 percent, while bond yields jumped on the ground like 54 basis points to 2.49 percent.

"The biggest problem facing the yuan bond market on the high seas is the supply," said Emil Nguy, president of Income Partners Asset Management (HK) Ltd., which is the creation of a fund to invest in values. "We are working with several banks close to the issuers and ask them to issue the bonds. Instead of raising funds and then wait for the offer to come, we take a more proactive approach."

The goals would be limited to investment grade issuers, Nguy, one of the two founders of hedge fund 17-year-old said in an interview from Hong Kong on 23 November. The fund will target companies such as Cheung Kong Holdings Ltd., a holding company billionaire Li Ka-shing, Samsung Electronics Co., the largest South Korean electronics manufacturer, and Reliance Industries Ltd., the largest company in India.

Strong demand

China is the sale of 8 billion yuan of securities this week, the first sale of government debt yuan in Hong Kong in more than one year. Fund managers will be offered 5 million RMB of notes, with 3 million yuan for people. The only previous sales Ministry of Finance of Hong Kong raised 6 billion yuan in October 2009.

The yield on the benchmark 3.29 percent of China due in September 2020 rose seven basis points to 4.07 percent in Shanghai on 26 November. Demand is so strong in Hong Kong that China will be able to sell bonds on the high seas to 10 years "in the low 2 percent" range, "said Nguy.

The yield on China's 2.25 per cent at sea by October 27, 2011, increased six basis points to 1.48 percent on Nov. 26, according to the Hong Kong Treasury Markets Association. Similar to-maturity debt on land added one basis point. In the last three months, the Brazilian bond yields to one year rose 64 basis points to 11.98 percent and India rose 72 basis points to 7.37 percent.

'Fertile Market "

Standard Chartered Plc is working with several funds and issuers to boost bond trading dim sum, said Sundeep Bhandari, head of global markets bank Northeast Asia. the average daily turnover could increase to six times to 300 billion yuan at the end of 2011, 50 million this month, the bank estimates.

"The market is very fertile," he said Nov. 26 in an interview from Hong Kong. "We are planning four road-shows in the first week of January to explain the details of these renminbi bonds to investors."

China Development Bank this month sold 3 billion yuan bonds in Hong Kong at 2.7 percent, 38 basis points cheaper than a sale of 20 million yuan in China in October. Caterpillar Inc., the world's largest maker of construction equipment, sold 1 million yuan, of 2 percent notes in December 2012 in the city on 24 November.

Beating deposits

Yuan bonds offer higher returns on deposits in Hong Kong. HSBC, which controls two of the three largest banks in the city, offers an interest rate of 0.71 percent on deposits of 500,000 yuan or less placed with her for 12 months. The bank this month forecast of yuan deposits nearly triple to 400 billion yuan in three years from now.

An investor who bought a year bonds offshore China a year ago would have earned a return of 2.7 percent. Addition of the expectations that the yuan to gain about 5 percent a year and the attractiveness of the debt is clear, "said Nguy, whose IP renminbi credit fund should start trading on 16 December.

Haitong Securities Co. 's Hong Kong unit of a fund of 5 billion yuan of bonds in September to invest in renminbi bonds offshore.

Auction No

land bonds plummeted in the past month after the central bank raised its benchmark rate of one-year deposits by a quarter percentage point on Oct. 19, the first increase since 2007, to help contain inflation. Consumer prices rose 4.4 percent from a year earlier in October, the biggest increase since September 2008.

The Ministry of Finance on 26 November not to attract sufficient demand in a sale bill for the first time since June, due to a shortage of cash in the banks after policy makers raised the reserve requirement twice this month. The ministry sold 11.55 billion yuan from the values of three months, less than its target of 20 billion yuan. The average yield was 2.7372 percent gain, compared with 2.52 percent on outstanding debt for 91 days on 25 November.

credit-default contracts to five years in exchange of Chinese government bonds rose seven basis points to 70.5 on November 26, CMA prices show in London. Have increased 10 basis points this month. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent of a government or a company fail to adhere to debt agreements.

Sales Planning

The expectations of faster gains currency among the BRIC countries Brazil, Russia, India and China are also increasing the attractiveness of yuan assets. The yuan, which closed at 6.6675 per dollar on 26 November in Shanghai, has risen by 2.4 percent from dollar parity two years ending 19 June. The rate at sea in Hong Kong of 6.6485 was 0.3 percent stronger. The yuan will advance 1.5 percent in 12 months, indicating non-deliverable.

The currency will gain 6.3 percent at the end of 2011, compared with 5.2 percent in the Indian rupee, 4.8 percent for the Russian ruble and 0.3 percent for real Brazil, according to the median estimate of analysts in our surveys.

International Finance Corporation, private investment arm of the World Bank, plans to sell about 100 billion yuan of five-year bonds in Hong Kong, Nina Shapiro, treasurer of the agency, said last month. United Co. Rusal, the world's largest producer of aluminum, has met with bankers to learn about the market in yuan, Oleg Mukhamedshin, the company's capital markets manager, said in an interview Sept. 15.

"It's easier, faster and cheaper to issue yuan bonds in Hong Kong, being a financial center, the market is more efficient, so the price of these bonds will be more attractive too," said Suan Teck Kin, an economist at United Overseas Bank Ltd. in Singapore. "In China, it can be tedious because you have to jump through all the hoops on regulatory requirements."