Dim Sum Bonds: The Offshore Renminbi (RMB)-Denominated Bonds

CHAPTER 3

Issuers

In Chapters 1 and 2, we presented the origin of the dim sum bond market and a historical account of its development from the perspective of the Chinese government policy and market characteristics of dim sum bonds. These chapters give a macro view of this nascent market. In this chapter, we present and discuss the characteristics of issuers who play a pivotal role in this emerging debt capital market. Issuers may elect to issue dim sum bonds with different choices with regard to bond attributes (amount, coupon, tenor, credit ratings, and bond protection) that are appropriate to their funding needs. We take the approach to understand the issuers' motivations behind this funding option and the dim sum bond market by way of exploring the profile characteristics of issuers. We classify issuers by type of organization, industry, issuer's domicile, and deal nationality. More important, we explore and discuss the rationales of different groups of issuers. For some issuers, they may simply consider it from an economic perspective (i.e., weighing the benefits of issuing dim sum bonds against the funding costs from alternative sources), while others may consider it from a strategic perspective, which could either be forging the long-term business relationship with China by supporting China's government efforts in anticipation of greater business relationship with the Chinese government in the future once the market matures, engaging its own existing investors in a new ...