China’s central bank officials remain hopeful about future of shrinking dim sum bond market

While dim sum bond issuance – yuan-denominated bonds issued in offshore yuan markets – has been shrinking for a few months, China’s’s top central bank officials say they remain hopeful about the market’s future.

Central bank governor Zhou Xiaochuan and his deputy, Yi Gang, both believe the market is not at all doomed.

The dim sum bond market had been an ideal place for mainland companies to get cheaper debt since its debut in 2007. But doubts have been raised over the past six months as the offshore yuan funds pool was squeezed amid weaker yuan ­expectations.

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To make it worse, the country is opening up its onshore debt market with a booming panda bond market – yuan-denominated bonds from non-Chinese issuers.

However, China’s central bank chief believes the future of the dim sum bond market will be just as rosy future as that of the panda bond market, and the current quietness in the dim sum bond market was merely temporary.

“In a middle-term view, I believe both panda bonds and dim sum bonds have fairly good development potential,” Zhou, governor of the People’s Bank of China (PBOC), told a press conference on the sidelines of the National People’s Congress.

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“The bond market, no matter whether onshore or offshore, has a very large development potential.”