Over the past three years, a dark cloud has been looming large in China—a massive debt bubble. It seems that, with each bit of good news, whether it’s GDP growth hitting 6.9% for the second quarter in a row, exports climbing to 7.2% Year on Year or Retail Sales surging by 10.4%, the dark cloud of a looming debt crisis grows darker and more menacing. So, when investors suddenly find their appetite whetted for Offshore Chinese debt, one should sit up and take notice.
Chinese Offshore RMB bonds, amusingly nicknamed Dim Sum bonds, are relatively new in the market, existing only since 2007. The Dim Sums’ appeal is, that they trade on offshore markets, rather than in mainland China, thereby allowing investors to buy Chinese debt without the risk of interference from Chinese regulators. As a result, the performance of Dim Sum bonds reflects the sentiment of Chinese debt more accurately. Continue reading "China: Signals From Dim Sum Bonds"