Chinese yuan Photo:VCG

Indonesia is planning its first offshore yuan-denominated bond sale, Bloomberg reported on Wednesday, joining a wave of deals that has driven dim sum bond issuance to a record level this year.

Indonesia would be the first country to issue dim sum bonds in years, according to data compiled by Bloomberg. 

A Chinese expert said that as overseas investors and enterprises hold an increasing amount of yuan, their demand for investment channels in the currency has naturally grown, driving the issuance and trading of yuan-denominated assets such as dim sum bonds.

Dim sum bonds, also known as yuan-denominated bonds issued in Hong Kong by entities outside the Chinese mainland, were introduced to meet growing international demand for yuan-denominated assets while offering issuers a new channel to raise funds in the Chinese currency, insiders said.

The potential offering may include five- and 10-year notes, according to a person familiar with the plan, the report said.
 
Government and corporate issuers have sold a combined 724.5 billion yuan ($102 billion) of dim sum notes this year, up about 8 percent year-on-year and the highest tally for the period ever, according to data compiled by Bloomberg.
 
Indonesia's planned dim sum bond issuance has appointed Bank of China (Hong Kong), HSBC, and Standard Chartered as joint lead managers and bookrunners, according to Lianhe Zaobao.

In recent years, the dim sum bond market has maintained steady growth amid China's push for greater two-way financial market opening and yuan internationalization.

The issuance of offshore yuan debt instruments in Hong Kong rose 36.7 percent year-on-year to 1.07 trillion yuan in 2024, driven mainly by non-certificate-of-deposit instruments, whose issuance surged 79.4 percent to 710.8 billion yuan, the Shanghai Securities News reported, citing an official report.

"In recent years, an increasing number of countries and companies have chosen to issue yuan-denominated bonds. The rising frequency and scale of such issuances indicate growing global demand for renminbi assets, reflecting the mutually reinforcing relationship between the currency's internationalization and market demand," said Bian Yongzu, executive deputy editor-in-chief of Modernization of Management magazine.

National creditworthiness plays a key role in the appeal of yuan-denominated bonds, Bian stressed. With Indonesia's solid economic growth, abundant resources, and close economic ties with China, its planned dim sum bond issuance in Hong Kong is expected to attract strong market interest, Bian said.

The bond helps issuers reduce reliance on third-party currencies, lowering exchange rate risks and trading costs, Bian said, noting that with the yuan remaining stable and expected to appreciate, such bonds offer strong value preservation potential for investors while enabling issuers to attract funding on more favorable terms.

He added that issuing yuan-denominated bonds serves not only as a financing tool but also as a key channel to expand the use of the yuan and deepen bilateral economic and trade ties. As more countries join the yuan bond market, the yuan's role in the global financial system is set to further strengthen, he said.

Like the rapid expansion of panda bonds issued by overseas entities in China, the issuance and growth of dim sum bonds have become important drivers of the yuan's internationalization, analysts said. 

As of Wednesday, a total of 93 panda bonds had been issued this year, with a volume of 151.15 billion yuan, data from financial data provider Wind showed, the Securities Daily reported.

The yuan had become China's largest settlement currency for cross-border transactions and one of the world's top three currencies for trade financing and global payments, and it ranked third in weighting within the IMF's Special Drawing Rights currency basket, People's Bank of China Governor Pan Gongsheng said at a press conference on September 22.