Dim Sum Bonds Set For Another Record Year

Fitch Ratings has said that it expects dim sum bond issuance to rebound in 4Q14, despite 3Q14 being a relatively quiet period for issuance.

Total dim sum bond issuance in US dollar terms fell by 65% to US$4.1bn in 3Q14 from 2Q14’s record level of US$11.7bn. The total number of entities issuing these bonds fell to 45 compared with 115 in 2Q14. Fitch said that it views the third quarter as a seasonal low, consistent with 2013’s case when total dim sum bond issuance was only US$1.1bn in 3Q13. However, issuance rebounded strongly to US$7.1bn in 4Q13.

Dim sum bond issuance fell sharply in 3Q14 versus 2Q14 for both local Chinese and multinational names, and across the three main categories of financial institutions, sovereigns, and corporates. Financial institutions continued to account for the lion’s share of dim sum bonds issuance, with US$2.9bn (70%) of 3Q14’s total issuance. However, their issuance fell 50% from 2Q14’s US$5.8bn. Issuance by sovereigns fell to US$0.7bn from US$3.1bn, and issuance by corporates declined to US$0.5bn from US$2.7bn.

Nevertheless, the ratings agency noted that issuance amounts for all three classes were higher when compared with the year-earlier period when financial institutions issued US$0.5bn, sovereigns US$0.1bn and corporates US$0.46bn.


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