For China’s bond market, 2015 might be remembered as the year the panda ate the dim sum.
As the International Monetary Fund looks all but certain to include the renminbi in its basket of global reserve currencies, the future of the offshore renminbi “dim sum” bond market (named after the bite-sized food) — renminbi-denominated bonds issued outside china, principally in Hong Kong — looks to be in peril. The onshore market appears to be primed for growth, including the “panda” segment for non-Chinese borrowers.
The dim sum market was launched in 2007 but did not really gain traction until 2010, when restrictions were loosened and international institutions also began to issue renminbi-denominated bonds. For investors, the market was initially seen as a currency play, but in recent years it has been maturing and the breadth of borrowers has widened from top quality state-backed bonds all the way down the ratings spectrum to high-risk single-B issuers.