A “dim sum bond” is a slang name for bonds issued in Hong Kong and denominated in Chinese yuan. Dim sum bonds appeal to overseas investors who want exposure to renminbi-denominated assets but are unable to participate in domestic Chinese debt due to China’s capital controls.
What exactly is a Dim Sum Bond?
What Is a Dim Sum Bond, and How Does It Work? A “dim sum bond” is a slang name for bonds issued in Hong Kong and denominated in Chinese yuan. Dim sum bonds appeal to overseas investors who want exposure to renminbi-denominated assets but are unable to participate in domestic Chinese debt due to China’s capital controls.
Is a Dim Sum bond considered a Eurobond?
Dimsum bonds are debt securities similar to euro bonds that are issued outside of China by a Chinese or foreign corporation, but are denominated in RMB and settled in RMB.
Dim sum bonds were first issued in Hong Kong and were called after Hong Kong’s famous dim sum cuisine. The dimsum bond was originally issued in 2007 by a Chinese development bank. Until 2010, these bonds could only be issued by Hong Kong and China-based companies. Following that, the Chinese government made regulatory adjustments and deregulated the market, allowing international firms and entities, such as McDonalds, to issue renminbi-denominated bonds. In London, the China Construction Bank was the first to issue dim sum bonds in 2012, followed by non-chinese banks such as HSBC and Banco do Brasil.
What are the five different forms of bonds?
- Treasury, savings, agency, municipal, and corporate bonds are the five basic types of bonds.
- Each bond has its unique set of sellers, purposes, buyers, and risk-to-reward ratios.
- You can acquire securities based on bonds, such as bond mutual funds, if you wish to take benefit of bonds. These are compilations of various bond types.
- Individual bonds are less hazardous than bond mutual funds, which is one of the contrasts between bonds and bond funds.
Why is it known as Masala Bond?
Masala bonds are bonds that are issued outside of India but are denominated in Indian Rupees instead of the local currency. Masala is an Indian word that translates to “spices.” The International Finance Corporation (IFC) coined the word to describe India’s culture and food. Unlike dollar bonds, which pass the currency risk to the borrower, Masala bonds pass the risk to the investors. In November 2014, the World Bank-backed IFC issued the first Masala bond, raising $1,000 crore to fund infrastructure projects in India. In August 2015, the International Financial Cooperation issued green masala bonds for the first time, raising Rupees 3.15 billion to be used for private sector investments in India that address climate change.
HDFC became the first Indian business to issue masala bonds when it obtained 3,000 crore rupees from them in July 2016. NTPC, a public sector unit, issued the first corporate green masala bonds for 2,000 crore rupees in August 2016.
What does dim sum mean?
Dim sum is a Cantonese steamed dumpling cuisine that is served in small, nearly bite-sized servings. In the United States, the phrase dim sum has come to refer to a manner of dining or a restaurant experience in which seated diners are served small portions of Chinese food from mobile carts. Restaurant patrons then select the meals they want to try, and when they “order,” they are handed plates from the cart.
What is the definition of a Chinese dollar bond?
Dollar-denominated bonds issued by Chinese financial institutions and enterprises are known as Chinese-issued US dollars bonds.
As a result of tougher local restrictions and market conditions, Chinese enterprises turned to the international bond market to obtain financing in 2017. This outperformed all other big Asian foreign currency bonds. Dollar bond issuance in China accounts for roughly 70% of all corporate dollar bond issuance in Asia (excluding Japan).
Tencent Holdings Limited, Industrial and Commercial Bank of China Limited, and Sinopec Group are among the major issuers. China’s Ministry of Finance announced intentions to issue US$2 billion in sovereign dollar bonds in Hong Kong in 2017, marking the country’s first dollar bond offering since October 2004. China’s technology and communications sector accounted for a sizable portion of the offshore US dollar bond market. In January 2018, Tencent issued $5 billion in notes.
Chinese institutions’ US dollar-denominated bonds have been dubbed ‘Kungfu bonds,’ a name coined by Bloomberg L.P. after consulting with more than 400 market participants across Asia.
Is there a Masala bond?
Masala Bonds are rupee-denominated bonds issued by Indian firms outside of India. They are debt products that aid in the raising of funds in local currency from international investors. These bonds can be issued by both the government and private businesses. These bonds are available to investors from outside India who want to invest in Indian assets. These bonds, which are members of the Financial Action Task Force, are available to any resident of that nation. The securities market regulator of the investors who subscribe should be a member of the International Organization of Securities Commissions. These bonds can also be purchased by Multilateral and Regional Financial Institutions, of which India is a member.
The bonds raised to the rupee equivalent of $50 million in a financial year have a three-year maturity period, according to the RBI. Bonds raised over the rupee equivalent of $50 million in a financial year have a five-year maturity period. These bonds are converted at market rate on the date of settlement of transactions for the issue and service of the bonds’ interest.
What does a bulldog bond entail?
- A bulldog bond is a sort of foreign bond issued by non-British companies looking to raise finance from British investors in pound sterling.
- Bulldog bonds are a type of bond that is sold in the United Kingdom and is purchased by investors who want to profit from the British pound.
- Because the British bulldog is a national symbol of England, these foreign, pound-denominated bonds are referred to as bulldog bonds.
Treasury bonds
The federal government issues treasuries to cover its financial imbalances. They’re regarded credit-risk-free since they’re backed by Uncle Sam’s massive taxing power. The disadvantage is that their yields will always be the lowest (except for tax-free munis). However, they outperform higher-yielding bonds during economic downturns, and the interest is tax-free in most states.