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

CHAPTER 6

Case Studies of Landmark Issues

This chapter provides the pertinent information on cases of the landmark dim sum bond issues and benchmark issues of long-dated dim sum bonds. These cases represent milestones for the journey that this nascent market has traveled thus far at the time of writing. Landmark issues have played a pivotal role in the internationalization of the renminbi (RMB) as well as in the projection of market development trends. These landmark issues illustrate the deliberate efforts of the Chinese government, and financial institutions and corporations that capitalized on the impediments in the domestic market arising from regulation, for example, regulated interest rates and cross-border capital control, and how issuers rode with the underlying trend of the appreciating RMB during the period 2007–2012. We describe the pertinent and distinctive attributes of each landmark issue, including the general bond information, issuer background, and use of proceeds. For each landmark case, we highlight the risks that are peculiar to each landmark dim sum bond issue, recognizing that dim sum bonds are vulnerable to all other risks that are common to fixed-income securities, that is, credit risk, interest rate risk, foreign exchange risk, liquidity risk, and legal risk. Moreover, we discuss the significance of each landmark issue. Finally, we describe a couple of landmark cases in which the innovative credit enhancement structures enable the issuers to circumvent ...