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Bank of China targets dim sum feast down under

Sunday, November 23, 2014 - 21:59
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Bank of China Ltd predicts Australian corporate borrowers will start issuing Dim Sum bonds by mid-2015 after the first offering from a state government.

[SYDNEY] Bank of China Ltd predicts Australian corporate borrowers will start issuing Dim Sum bonds by mid-2015 after the first offering from a state government.

The sale last week by New South Wales, the country's biggest regional economy, of US$163 million of securities opens the door for non-financial companies that do business with China, said Shanjun Hu, Australia country head for Bank of China, which managed the transaction with Australia & New Zealand Banking Group Ltd.

"I can imagine in the coming years more and more Australian companies will participate," Mr Hu said in a Nov. 20 interview in Sydney. BOC has spoken to potential issuers and the market may develop "very quickly," possibly reaching "hundreds of billions" of yuan over the next few years, he said.

The NSW offering capped a week in which China's President Xi Jinping addressed parliament in Canberra, Australia reached a free trade accord with its largest commercial partner and Sydney was named as the world's 12th offshore yuan clearing hub.

China is seeking to encourage greater global use of the yuan with borrowers such as the UK Treasury and Caterpillar Inc issuing Dim Sum debt. ANZ and National Australia Bank Ltd. have previously sold such bonds, data compiled by Bloomberg show.

Australian issuers sold the equivalent of at least US$79 billion of notes offshore this year, borrowing in currencies ranging from US dollars and euros to Swiss francs and Japanese yen. The nation's domestic market has seen more than US$67 billion in transactions, excluding Kangaroo sales.

BLOOMBERG