Bloomberg News

HSBC Starts Yuan Bond Fund for U.S. as Dim Sum Market Expands

June 12, 2012

HSBC Holdings Plc (HSBA), Europe’s biggest bank, has started a fixed income fund for U.S. investors that will invest in bonds sold in China’s currency in Hong Kong.

The HSBC RMB Fixed Income Fund will buy securities denominated in the Chinese currency, also known as the renminbi, the London-based bank said in a statement on Business Wire today. It will be managed by HSBC Global Asset Management’s Hong Kong-based fixed-income team, it said.

“The investment case for the offshore renminbi bond market is compelling, given competitive yields and the long-term potential for the renminbi currency to appreciate,” Cecilia Chan, who has managed Asian fixed income assets for 18 years at HSBC, said in the statement. “The internationalization of the renminbi will continue to be an important theme for many years to come.”

China, which has allowed Hong Kong residents to hold yuan in bank accounts since 2004, began to open the currency to other uses outside of its borders in 2009, with a program to allow trade with Chinese companies to be paid for in yuan.

China ended its own peg to the U.S. dollar in July 2005, saying it would manage the exchange rate against a basket of currencies, and the yuan has strengthened 30 percent versus the greenback in that time. Sales of yuan bonds in Hong Kong, known as Dim Sum bonds, began in 2007.

There were 79 billion yuan of Dim Sum bonds sold this year, according to data compiled by Bloomberg, compared to 151 billion yuan in 2011.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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