The Chinese renminbi was a more popular currency for company bond sales than the euro for the first time in the third quarter, underlining the debilitating effect of the eurozone’s sovereign debt crisis, while China has nurtured its own, potentially huge bond market.
Renminbi-denominated corporate bond issuance by non-financial companies remained relatively steady at Rmb200 billion ($31.1 billion) in the third quarter, while euro-denominated sales more than halved to $26.4 billion, according to Dealogic, a data provider. The shift is largely due to the severe stresses in Europe’s financial system, but also reflects Chinese efforts to develop and internationalize its own capital markets.
“This is a clear demonstration that emerging markets have emerged,” said Hakan Wohlin, a senior banker at Deutsche Bank. “It’s an extremely positive development for global capital markets.”
Estimates on bond issuance vary. Figures from Thomson Reuters describe a similar trend — falling euro-denominated debt sales set against more stable renminbi issuance — but estimate that euros still outstrip the Chinese currency.
The U.S. dollar remains the dominant currency for corporate bond sales, representing more than half the global market in the past three months, according to Thomson Reuters.
But bankers say the trend towards more Chinese renminbi issuance — both in the onshore and so-called Dim Sum offshore market — is clear, and likely to continue. Renminbi corporate bond sales have reached $108 billion so far this year, the second highest total on record and 18 percent higher than the same period last year.
“Both the onshore and offshore renminbi bond markets are continuing to grow unabated,” Mr Wohlin said.