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Dim Sum Bonds: The Offshore Renminbi (RMB)-Denominated Bonds by Jot Yau, Glenn Chi-Wo Ko, Hung-Gay Fung

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CHAPTER 2

Offshore RMB-Denominated Bonds—Dim Sum Bonds

The previous chapter gave an account of the historical developments of the offshore renminbi (RMB)-denominated bonds as part of China's grand scheme of the internationalization of the renminbi. It highlighted the significance of the government policy as an instrumental directive to the development and growth of this nascent market. From the investor's as well as the issuer's perspective, the future development of this market is very much dependent on the policy stance of the Chinese central government toward its overall policy goal of RMB internationalization. Uncertainty arising from policy risk is largely unhedgeable and can be managed only by careful monitoring of the government policy as well as market conditions, which may in turn force the government to change its course on the internationalization of RMB. In this chapter, we present information and characteristics of the offshore RMB-denominated bonds in Hong Kong, also known as the “dim sum” bonds that are of interest to potential investors and issuers for understanding the details of this new offshore RMB debt market orchestrated by the Chinese government. Systematic presentation of the characteristics of the market enables potential investors and issuers to make informed decisions about whether this market is appropriate for investing or as a funding source. The bond characteristics and trends thereof we present in this chapter include type and form; coupon; tenor; ...

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