Illiquid lunch

Author: | Published: 4 May 2011

Chinese renminbi (RMB) is the newest addition to the smorgasbord of euro-currencies. From a standing start in July 2010, the market has been flooded with – at the last count – some two dozen issues of RMB-denominated bonds, a phenomenon sufficiently noteworthy to earn these bonds their own name: dim sum bonds.

Alongside Chinese businesses, well-known international borrowers such as World Bank, International Financial Corporation, Caterpillar, VTB Bank, Orix Corporation and ANZ have all tapped the market.

But dim sum is a misleading coinage for these bonds. Dim sum – the generic name for the range of dumplings and other local delicacies which are a popular lunch or snack in Hong Kong – seems to have been chosen to identify RMB-denominated bonds with Hong Kong, in the same way that samurai bonds are identified with Japan, Yankee bonds with the US, and so on.

But samurai bonds and Yankee bonds...