Tuesday, November 15, 2011

Dim Sum Bonds Surging

Up six-fold since last year. Some big names issuing yuan debt.

China Wary of Choking on Dollar Driving Hong Kong Dim Sum Bonds
Reflecting a trend, McDonald's Corp. issued 200 million yuan of debt in August 2010, marking the first Dim Sum deal by an overseas nonfinancial company.

Bond sales by Caterpillar Inc., Volkswagen AG and Tesco Plc, leading a charge of over 80 issuers, could bring total sales to 230 billion yuan ($36 billion) this year, a sixfold jump from last year, according to HSBC. The lender forecasts Dim Sum bond sales could total as much as 310 billion yuan in 2012.

Dim Sum bonds are a way for China to hedge its dollar bets. The world's second-largest economy is promoting the use of yuan in global trade and finance because the weakness of the U.S. dollar may hurt its record $3.2 trillion in foreign-exchange reserves.

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