Guangdong to join ‘dim sum’ bond feast with US$1 billion sale in Hong Kong, Macau

Name: SCMP
Telephone: +852-2680-8888

Province’s move follows Shenzhen’s announcement of a US$964.4 million sale of offshore yuan-denominated bonds

Reading Time:3 minutes

Why you can trust SCMP

Last year, ‘dim sum’ bonds issued in Hong Kong increased by 65 per cent to 550 billion yuan, according to the monetary authority. Photo: Bloomberg

Jiaxing LiandAileen Chuang

Published: 4:00pm, 30 Jul 2024Updated: 5:46pm, 30 Jul 2024

China’s southern province Guangdong is looking to issue up to 7.5 billion yuan (US$1.03 billion) of offshore yuan-denominated bonds in Hong Kong, in a move that underscores China’s renewed push to internationalise its currency and strengthen the city’s role as an offshore yuan hub.

The provincial Department of Finance is hiring bookrunners to issue bonds worth up to 5 billion yuan in Hong Kong and 2.5 billion yuan in Macau, according to a notice on Monday. The maturity of the bonds will be no more than five years, according to the notice.

The planned offerings will be the province’s debut offshore yuan bond in Hong Kong and its fourth issuance in Macau. The authority said the issuances will “further promote the integrated development of the Guangdong-Hong Kong-Macau Greater Bay Area”.

The sale of the yuan-denominated offshore debt, also known as dim sum bonds, followed Shenzhen’s announcement on Monday of its fourth such issuance, worth up to 7 billion yuan. The latest Shenzhen bond will include a tranche with a 10-year tenure, while also matching the two-, three- and five-year tranches of previous issuances.

Last year, the Shenzhen Municipal People’s Government issued offshore bonds in Hong Kong for the third consecutive year, totalling 5 billion yuan including a green bond and a social bond. In the same year, the Hainan provincial government completed its second issuance in Hong Kong of 5 billion yuan, comprising green, blue and sustainable bonds.

“So far, Guangdong, Shenzhen and Hainan have issued offshore dim sum bonds,” said Samuel Kwok, regional head of APAC international public finance ratings at Fitch Ratings. Their reasons “could be to broaden the financing channel, as well as developing the [offshore yuan] market”, he added.

The issuance of dim sum bonds is part of China’s effort to internationalise the nation’s currency. The first offshore yuan bond was issued in Hong Kong in 2007, promoting the city as the largest offshore yuan centre outside mainland China.