Dim Sum Market Ready for More LatAm Trades

The growing Dim Sum bond market could easily accommodate more LatAm borrowers, though followers of America Movil’s recent foray into the CNH-denominated instruments could take some time in getting there. “There will be tremendous room for Brazilian companies to come and raise capital,” says George Ding, CEO of Hua An Fund Management in Hong Kong. Hong Kong is expected to be at the center of the Chinese government’s 5-year drive to internationalize the renminbi, and more LatAm issuers could come to this market in 2012 if they so chose, he adds. Local bank deposits of some CNH630bn ($100bn) with very low rates means that investors will likely be willing to buy higher yielding LatAm bonds denominated in a currency that looks set to appreciate going forward. “There is room for more foreign issuers,” says Joao Paulo Loyola, who works in Bradesco’s fixed-income sales in Hong Kong. “We have an amount outstanding of CNH150bn in bonds, so the potential demand is 4 times.” For now, however, the Dim Sum market remains the domain of high-grade issuers only, limiting access to a broader swathe of LatAm credits. Furthermore, funding in this market is only attractive to those issuers who have some costs in renminbi. America Movil ticks both boxes, and became the first LatAm Dim Sum issuer last week after selling a CNH1bn 3-year. Ding and Loyola spoke this week at the LatinFinance Latin America Asia-Pacific Investors Forum in Hong Kong.