So new is the trade in offshore Chinese currency bonds that it has yet to gain a proper name. For want of anything else, it is often dubbed the “dim sum” market, in culinary recognition of its Hong Kong home base.
In spite of its infancy, interest in the market is growing quickly. Caterpillar, the US-based maker of earthmoving equipment, launched a Rmb1bn ($150m) bond issue last month, making it the second multinational to tap the market, following an August issue by McDonald’s, the fast-food chain.
What makes these bond issues important is that the offshore renminbi market is much more than just a new avenue for debt financing – it is one of the core components in a plan to internationalise the Chinese currency. The process will be a slow one, with more baby steps than giant leaps, and it is by no means assured that the renminbi – also known as the yuan – will forge a decisive international role. But it is one that could have a huge long-term impact on trade, the global financial system and even international politics.