Dim Sum Bonds

HUNG-GAY FUNG, PhD, is Curators' Professor of Finance, Dr. Y. S. Tsiang Endowed Chair Professor of Chinese Studies, and department chair in the Finance and Legal Studies Department, College of Business Administration, University of Missouri–St. Louis. His areas of research and teaching include international finance, financial risk management, and banking. GLENN KO, CFA, is an executive director of the UBS Asian Credit Research team, covering corporate credits. He focuses on Chinese properties and industrials. He has extensive experience in Asia's straight and convertible bond markets, with previous work experience in proprietary trading desks, sell-side research, and rating advisory at financial institutions, such as Daiwa, JPMorgan and HSBC. JOT YAU, PhD, CFA, is Dr. Khalil Dibee Endowed Chair in Finance at the Albers School of Business and Economics, Seattle University. Since joining Seattle University in 2001, he has served as the chair of the department of finance and MSF program director. He cofounded Strategic Options Investment Advisors Ltd., a Hong Kong–based investment advisory firm.

• Preface xiAcknowledgments xviList of Acronyms and Key Terms xviiChapter 1 New Market—Developments, Opportunities, and Challenges 11.1 Introduction 11.2 Overview of the Dim Sum Bond Market 61.3 Policies Supporting the Growth of Offshore Renminbi 8Chapter 2 Offshore RMB-Denominated Bonds—Dim Sum Bonds 212.1 Definition 212.2 Bond Issue Characteristics 242.3 Conclusion 46Chapter 3 Issuers 493.1 Issuers 503.2 Classification of Issuers by Type of Organization 523.3 Classification of Issuers by Industry 603.4 Classification of Issuers by Domicile and by Deal Nationality 633.5 Motivations behind Issuers 673.6 Conclusion 75Chapter 4 Investors 794.1 Investor Type and Mix 804.2 Motivation 824.3 Risk/Return Analysis 864.4 Conclusion 98Chapter 5 Investment Banks and the Dim Sum Bond Issuing Process 1015.1 Dim Sum Bond Issuing Process 1015.2 Primary Issues 1045.3 Bookrunner/Manager Rankings 1165.4 Bond Issuing Fees 1185.5 Retail versus Institutional Tranches 1185.6 Conclusion 119Chapter 6 Case Studies of Landmark Issues 1216.1 Landmark Issues 1216.2 Case 1: The First Dim Sum Bond and the First Chinese Financial Institution Issuer—China Development Bank (and the First 15-Year and 20-Year Bonds) 1266.3 Case 2: The First Dim Sum Bond Issued by a China-Incorporated Foreign Bank—The Bank of East Asia (China) Limited 1316.4 Case 3: The First Dim Sum Bond Issued by the Chinese Central Government 1356.5 Case 4: The First Dim Sum Bond Issued by a Foreign Multinational Corporation—McDonald’s Corporation 1376.6 Case 5: The First Dim Sum Bonds Issued by a Supranational Agency—Asian Development Bank (and the First 10-Year Dim Sum Bond) 1426.7 Case 6: The First Dim Sum Bonds Issued by a Chinese Company, Incorporated Outside Mainland China and Listed in Hong Kong (Red-Chip Corporation)—Sinotruk (Hong Kong) Limited 1456.8 Case 7: The First Mainland Chinese Corporation Listed in Hong Kong (H-share) Issuer of Dim Sum Bonds—Beijing Capital Land Ltd. 1496.9 Case 8: The First PRC-listed (A-Share) Issuer of Dim Sum Bonds—Gemdale Corporation 1536.10 Conclusion 157Chapter 7 Conclusion 1597.1 Review and Preview of the Development and Growth of the Dim Sum Bond Market 1597.2 Market Participants 1667.3 Ongoing Developments Affecting the Dim Sum Bond Market 1747.4 Final Remarks 176About the Authors 179Index 181