Renminbi bond issuance has grown substantially in both the bond and CPCD* markets this year. Demand is driven by higher yields offered, plus the potential for currency movements. In recent months, the Renminbi has depreciated, raising the prospect of buy-side yield pickups from currency swaps as often happens when FX volatility takes place. Moreover, ingoing funding strains on China are also raising the importance of having diversified international funding solutions for mainstay Chinese FIGs.
CNY-denominated bond issuance totalled CNY116.4bn (USD18.6bn) in the first 4 months of 2014. In the same period in 2013, CNY58.2bn (USD9.3bn) was issued, marking a doubling of new issuance. This growth is also mirrored in the shorter-term CPCD market, where CNY120.2bn (USD19.2bn) has come through this year, compared to CNY51.3bn (USD8.2bn) in the same period last year.
CPCD issuance in the currency market this year has already outpaced the whole of 2013, when issuance reached CNY111.4bn (USD17.8bn). Bond issuance at year end 2013 reached CNY192.1bn (USD30.7bn).
In Q1 2014, issuance on a monthly basis saw a continuous increase in both bonds and CPCD. March was the busiest month for both markets. Month on month in the bond market however, April’s issuance was 28% lower at CNY25.7bn (USD4.1bn). In the CPCD market, April’s issuance was 48% lower at CNY21.3bn (USD3.4bn).
Banks are the biggest issuers. This year, this sector comprised 60% of bond issuance, slightly more than the 57% share last year 2013. The increase in corporate supply was more pronounced, as the sector comprised 28% of the bond market this year, compared to 14% last year. SSAs are least active, making up just 3% of the market this year.
In the shorter term CPCD market, banks supplied all of the volume in the first 4 months of 2013. So far this year, their dominance remains in place.
Leading the bond market’s league table is Agricultural Bank China HK (ABC) this year, with CNY11.3bn (USD1.8bn) issued across 50 tickets. China Construction Bank (Sydney) (CCB) follows. In third place is a corporate issuer, China Unicom, with CNY8.1bn (USD1.3bn). In the same period last year, a corporate borrower was leading the table. New World China Land topped with a single large CNY3bn (USD482m) 5yr bond.
On the dealer side this year, HSBC rules both the self-led inclusive market and the third-party market, as it did in 2013. On the third-party side, Barclays made a big push this year and rose to 2nd place with 9 transactions. Last year, Barclays was in 10th place.
The top of the CPCD issuer league table for this year has Industrial Commercial Bank China (ICBC) as the lead with CNY16.9bn (USD2.7bn), followed by ABC, CCB and BoC (SG) all around the USD1.5bn mark. In the same period last year the leader board was remarkably different, with ABC taking top spot on CNY20.0bn (USD3.2bn) followed by ICBC on less than USD1bn. So, the market this year has far more issuer diversification and it is also more dissipated in issuer concentration.
* commercial paper and certificate of deposit instruments
Quelle: CMDportal
www.fixed-income.org
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Soeben erschienen: BOND YEARBOOK 2013/14 -
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