China Construction Considering Dim Sum Bond Issue

Sale would take place in London, and would be first to be listed there

The second largest bank in China is considering using London as the venue for an issue of yuan-denominated bonds for offshore sale, said a source with knowledge of the plans. The listing would be the first in the city of Dim Sum notes sold by a Chinese company.

The notes are expected to be issued in November, although terms are not yet complete, Bloomberg reported Friday. A Fitch Ratings report also from Friday said that China Construction Bank (CCB) plans to sell as much as 2.5 billion yuan ($401 million) of the securities as a means of developing its offshore yuan business.

Fitch added that the notes will be sold by CCBL Funding Plc, a special-purpose vehicle of CCB’s London unit. In a report issued Wednesday on Dim Sum bonds in general, Matt Jamieson, head of APAC research in Fitch’s corporate ratings group, characterized their potential: "Fitch believes the Dim Sum bond market remains in a nascent stage, with significant growth potential over the medium to long term."

Eight different offerings of Dim Sum notes are listed in London, totaling sales of 512 billion yuan to date, but, according to Bloomberg data, they are issued by such institutions as Australia & New Zealand Banking Group Ltd., HSBC Holdings Plc and Lloyds Banking Group Plc.

In April, George Osborne, Britain’s Chancellor of the Exchequer, said that he intended to make London a center for yuan-denominated financial products.

 

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