Partners Fund Revenue Bonds to start next month as Yuan currency appreciates

Income Partners Asset Management (HK) Ltd., a manager of 17 years old from Hong Kong in Asia focused fixed income pools, plans to launch a yuan bond fund to meet investor demand for assets in currency appreciation.

IP renminbi Credit Fund will raise money from wealthy individuals and institutions to buy yuan mainly in investment grade bonds sold in Hong Kong, said Emil Nguy, co-founder and managing partner in charge of credit liquid investment partners income. Is expected to begin operations on December 16, he added.

Open-ended, long-only fund is "to provide foreign investors an option to play the yuan's appreciation with a yield of interest," said Nguy in an interview yesterday.

China is allowing greater use of its currency in trade and global investment to reduce dependence on U.S. dollar as the printing of money by the Federal Reserve has eroded the value of the dollar. In July, China relaxed restrictions on companies buying and selling yuan in Hong Kong and holders of yuan deposits in transfer of money to buy wealth management products.

The yuan is expected to gain 6.5 percent at the end of next year, according to the median estimate of analysts in  surveys. yuan deposits in Hong Kong banks more than doubled to 149 million yuan (22.4 billion dollars) in the six months ended September 30 Hong Kong Monetary Authority figures showed. Since the relaxation of July, the value of bonds sold in Hong Kong yuan jumped 42 percent to 50 billion yuan, according to a November 15 report by Royal Bank of Scotland Group Plc.

Caterpillar, McDonald's

Caterpillar Inc., the world's largest maker of construction equipment, sold 1 million yuan bonds in Hong Kong this month. It joins China, Development Corporation, Asian Development Bank, Hopewell Highway Infrastructure Ltd. and McDonald's Corp., which sold debt yuan in the city.

Nguy downplayed concerns that the approval on a case by case, regulations necessary for companies to reinvest the proceeds from the sale of new bonds in China discourage emissions. Ministry of Finance of China announced this week plans to sell 8 billion yuan of bonds in Hong Kong is an indication of China's determination to grow the market, he said.

"Because of the demand is so high, it can fund cheaper here," said Nguy. "The demand for investing in yuan is so high, the concern is supply."

Income Partners has approached the Bank of China International Holdings Ltd., Deutsche Bank AG, RBS and Standard Chartered Plc, in anticipation of possible locations yuan of bonds stripped of their top five customers with plans to issue debt and large operations in China. It is in the process of securing a fifth banking partner, "said Nguy.

The fragmentation of markets

Income Partners, established in 1993, manages about $ 800 million in long and only focused coverage of credit and managed accounts tailored to the needs of individual investors.

credit investors in Asia has long been frustrated by the small and fragmented regional markets in different currencies, credit rating systems are in various stages of development, and the absence of a large group of regional investors such as pension funds , mutual funds and insurance companies, said Nguy.

The regional bond market dominated by foreign investors suffered their removal both during the Asian financial crisis in 1997 and the global credit crisis latest, he said.

"You're starting to have the basic ingredients of a significant market that China has reached a stage where they can have a type in the AA ratings, and a unified market that is large enough for primary and secondary activities develop and have a large enough base of national investors, "said Nguy.

Raymond Gui Income Partners hired to help manage the fund. He was a former senior portfolio manager in Hong Kong who helped oversee fixed-income investments in China Construction Bank Corp., the second largest nation. He served as a strategist for the State Administration of Foreign Exchange from 2002 to 2004, helping the asset allocation of investment assets of the regulator, said.

Investors in Hong Kong and Singapore have shown the greatest interest in bond funds denominated in yuan, said Nguy.