The offshore renminbi bond market has long been a simple beast. When the Chinese currency rose, such credit would perform well. When the renminbi fell, the bonds – known better as “dim sum bonds” – would falter, and new issuance would evaporate.
However, that pattern appears to have been broken. Over the past two months, the renminbi has suffered a sharp, unexpected turn – falling to its lowest against the dollar in more than a year. Against the euro, the currency of China’s biggest trading partner, the renminbi has dropped to levels not seen since 2011.
Yet the dim sum bond market has barely blinked. In the year to date, companies have raised $10.8bn in offshore renminbi bonds – including both Hong Kong and Taiwan issued debt – more than double the amount during the same period last year, according to Dealogic. April alone saw $2.5bn of new issuance, in spite of the currency weakness.