CNH Tracker-Dim sum market set for a booster shot

Reuters

By Michelle Chen

HONG KONG, Oct 24 (Reuters) - As China makes important

strides to expand the yuan's footprint beyond Hong Kong, more

favorable policies are expected to breathe fresh life into the

moribund offshore yuan bond market in the former British colony.

Of particular note is the primary market's new sales, which

have come to a shuddering halt after the summer even as the $80

billion so-called "dim sum" debt market eked out steady gains

for three straight months since July.

That is in contrast to a flurry of Chinese names that made a

beeline into the dollar bond market which has seen a rebound in

activity as the U.S. Federal Reserve delayed its plans to start

winding back its stimulus.

Bankers believe a long-awaited new batch of quotas which

allows Chinese issuers to sell dim sum bonds will be granted

soon to activate the market. The total size may climb to 75

billion yuan ($12.33 billion), up 50 percent from the first

batch.

State-owned enterprises (SOEs) controlled by local

governments are also likely to be permitted to issue yuan bonds

in Hong Kong, in addition to those owned by China's central

government.

The world's second-largest economy is sparing no effort to

promote the wider use of its currency as it aims to advance its

status on par with the dollar. The yuan now ranks as the eighth

most traded currency in the world, according to SWIFT.

Beijing extended its prized offshore yuan investment scheme

to Singapore and allowed direct currency trading between the

yuan and Singapore dollar on Tuesday, following a similar

package bestowed to London last week.

"The Chinese government will implement soon, initiatives

that will expand the dim sum bond pilot scheme, to enable more

China-based issuers to issue dim sum bonds directly," says Ivan

Chung, a Moody's senior credit officer.RECENT STORIES:

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