Tuesday, February 1, 2011

Latest Synthetic Yuan Bond Offering Delayed

The latest Synthetic offering from Zhong An has been delayed due to the difficulty of pricing it in the current volatile market.

UPDATE: Zhong An Delays Pricing Of Yuan Bond Issue - Sources
There have been four such issuances since Shui On Land Ltd. sold the first synthetic yuan bond in December. The five issuances raised the U.S. dollar-equivalent of CNY18.5 billion. Four of these issuers were Chinese developers, which raised a combined CNY17.75 billion.

Such bonds have been introduced over the last few months after Chinese authorities eased regulations to encourage offshore yuan trading in July. Two main types of yuan bonds exist: those denominated and payable in yuan, known as "dim sum" bonds; and synthetic yuan bonds.

Synthetic yuan bonds have proved more popular among issuers because of the large pool of investors using U.S. dollars and restrictions on the Chinese currency's movements back into China.

17.75 billion Yuan is 2.65 billion US$

Remember, back in early last December 2010 the government banned banks from financing real estate development by all but 16 state owned companies. 17.75 billion yuan is a drop compared to the 4,826.7 billion yuan spent on development in 2010, so this isn't a serious end-run around that limitation. But the eagerness for these bonds demonstrates that China is still a draw for investment. The last crash in Hong Kong was triggered by money being withdrawn from the zone. We aren't anywhere near that point, apparently.

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