Dim Sum Bonds The Offshore Renminbi (RMB)-Denominated Bonds

A comprehensive guide to understanding and assimilating into dim sum bond markets

The expansive growth of the dim sum bond market in the last five years has peaked investor interest and inspired companies to seek out investing opportunities that negate China's capital controls. In a four-pronged approach, Dim Sum Bonds examines the development of the dim sum bond market and its role in China's RMB internationalization policy, characteristics of dim sum bonds and its market, investors' investment objectives and the investment performance of dim sum bonds, motivations of issuers, and underwriters' roles in the dim sum bond market. You will familiarize yourself with every aspect of the dim sum bond market from an issuer, an investor, and an underwriter's perspective. Academics, financial advisors, investment bankers, underwriters, investors, and policy makers should not be without this informative and detailed guide to the offshore market central to China's internationalization of RMB.

• Written by Hung-Gay Fung, Glenn Chi-Wo Ko, and Jot Yau, all of whom are experts on the dim sum bond market
• Explains the rapidly expanding dim sum bond market and puts readers ahead of the curve
• Landmark issues, Chinese banks (China Development Bank), Infrastructure, red-chip companies (Sinotruk), and multinational corporations doing business in China (McDonald’s) are discussed in detail.

Covering landmark issues from a variety of Chinese and multinational corporations, Dim Sum Bonds provides must-read manual to understanding the vast opportunities of this up-and-coming market.

HUNG-GAY FUNG, PhD, is Curators' Professor of Finance, Dr. Y. S. Tsiang Endowed Chair Professor of Chinese Studies, and department chair in the Finance and Legal Studies Department, College of Business Administration, University of Missouri-St. Louis. His areas of research and teaching include international finance, financial risk management, and banking. He has published over 150 scholarly papers in various journals. He has also published seven books, numerous book chapters, and many teaching cases.

GLENN KO, CFA, is an executive director of the UBS Asian Credit Research team, covering corporate credits. He focuses on Chinese properties and industrials. He has extensive experience in Asia's straight and convertible bond markets, with previous work experience in proprietary trading desks, sell-side research, and rating advisory at financial institutions, such as Daiwa, JPMorgan and HSBC. Prior to these, he worked at Moody's as a credit rating analyst.

JOT YAU, PhD, CFA, is Dr. Khalil Dibee Endowed Chair in Finance at the Albers School of Business and Economics, Seattle University. Since joining Seattle University in 2001, he has served as the chair of the department of finance and MSF program director. He has published numerous articles and chapters in finance journals and professional books. He is the coeditor and coauthor of two books. He has served on several editorial boards, and was the associate editor and special editor (Risk Management) of the Journal of Alternative Investments. He cofounded Strategic Options Investment Advisors Ltd., a Hong Kong-based investment advisory firm. He served on the board of directors of Group Health Credit Union and of the Northwest Hedge Fund Society, where he was also the treasurer.

Preface

Acknowledgments

List of Acronyms and Key Terms

Chapter 1: New Market: Developments, Opportunities and Challenges

1.1 Introduction

1.2 Overview of the dim sum bond market

1.3 Policies supporting the growth of offshore renminbi  

Chapter 2: Offshore RMB-Denominated Bonds: Dim Sum Bonds

2.1 Definition

2.2 Bond issue characteristics

2.3 Conclusion

Chapter 3: Issuers

3.1 Issuers

3.2 Classification of issuers by type of organization

3.3 Classification of issues by industry

3.4 Classification of issuers by domicile and by deal nationality

3.5 Motivations behind issuers

3.6 Conclusion

Chapter 4: Investors

4.1 Investor type & mix

4.2 Motivation

4.3 Risk/Return analysis

4.4 Conclusion

Chapter 5: Investment banks and the dim sum bond issuing process

5.1 Dim sum bond issuance process

5.2 Primary issues

5.3 Bookrunner/Manager rankings

5.4 Bond issuing fees

5.5 Retail and institutional tranches

5.6 Conclusion

Chapter 6: Case Studies of Landmark Issues

6.1 Landmark Issues

6.2 Case 1 – The first dim sum bond and the first Chinese financial institution issuer – China Development Bank (and the first 15-year and 20-year bonds)

6.3 Case 2: The first dim sum bond issued by China-incorporated foreign banks – The case of the Bank of East Asia (China) Limited

6.4 Case 3: The first dim sum bond issued by the Chinese central government

6.5 Case 4: The first dim sum bond issued by a foreign, multinational corporation – McDonald’s Corporation

6.6 Case 5: The first dim sum bonds issued by a supranational agency – Asian Development Bank (and the first 10-year dim sum bond)

6.7 Case 6: The first dim sum bonds issued by a Chinese company, incorporated outside mainland China and listed in Hong Kong (red-chip corporation) – Sinotruk (Hong Kong) Limited

6.8 Case 7: The first mainland Chinese corporation listed in Hong Kong (H-share) issuer of dim sum bonds - Beijing Capital Land Ltd.

6.9 Case 8: The first Chinese exchange-listed (A-share) issuer of dim sum bonds – Gemdale Corporation

6.10 Conclusion

Chapter 7: Conclusion

7.1 Review and preview of the development and growth of the dim sum bond market

7.2 Market Participants

7.3 Ongoing Development Affecting the Dim Sum Bond Market

7.4 Final Remarks

About the Authors

Index

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