Investors eat up dim sum bonds from Guangdong province, Hong Kong’s MTR

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Issuance of offshore yuan-denominated bonds has jumped 28 per cent this year, according to the Hong Kong Monetary Authority

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Issuance of so-called dim sum bonds exceeded 465 billion yuan (US$65 billion) in the first half of 2024. Photo: Bloomberg

Aileen Chuang

Published: 6:00pm, 11 Sep 2024

The government of Guangdong province and rail operator MTR Corp have completed yuan-denominated bond offerings in Hong Kong, adding to a record wave of such issuances in the city this year.

The 5 billion yuan (US$703 million) offering by the southern Chinese province, comprising 2 billion yuan in two-year bonds, 1.5 billion yuan in three-year bonds and 1.5 billion yuan in five-year bonds, attracted 57.18 billion yuan in bids from investors, making it 11.4 times oversubscribed, Bank of China (Hong Kong) said in a press release on Wednesday. BOCHK is a joint lead-manager and bookrunner, the clearing bank and the green structure consultant for the sale.

It was the provincial government’s debut offshore yuan issuance in Hong Kong. The yields on the so-called dim sum bonds were 2.08 per cent, 2.13 per cent and 2.23 per cent, respectively.

The dim sum bond market has been booming this year. Issuance exceeded 465 billion yuan in the first half, a jump of 28 per cent despite a higher base of comparison in the year-earlier period, according to the Hong Kong Monetary Authority.

The latest offering follows two other issuances by Chinese authorities last month. The Shenzhen municipal government’s fourth and largest dim sum bond offering raised 7 billion yuan with an oversubscription rate of 6.9 times, while the Ministry of Finance’s 9 billion yuan offering was overbought by 2.4 times.

More issuances would expand dim sum bond varieties and improve the yield curve with a more comprehensive pricing reference, regulators and market participants said.