China adds more bonds to the oversupplied bond markets.

As discussed in Asian CDS markets are now oversupplied, China is now adding to the mass of bonds hitting the markets. Asia bond and CDS markets are hitting bubble status and when it bursts...

HONG KONG, Nov 22 (IFR) - China’s Ministry of Finance has announced a CNY8bn (US$882m) renminbi sovereign bond in Hong Kong, which will mark its return to the territory after over a year. In September 2009, the MoF tapped a CNY6bn bond. Launch of the new deal is expected shortly. The deal size remains at CNY8bn despite some rumours suggesting a scale-down to Rmb6bn. Bonds of 3-, 5- and 10-year and longer tenors are likely to be on offer. Bank of China (Hong Kong) and Bank of Communications, which handled MoF’s previous deal, are leading to the new issue with ICBC Asia. The CNY5bn part, consisting of CNY2bn 3-year, CNY2bn 5-year and CNY1bn 10-year, targeting institutional investors will be using a tendering method on the Central Money markets Unit (CMU) of Hong Kong Monetary Authority. And, the rest CNY3bn for a tenor of 2 years will be offered to the retail investors. “This will facilitate the development of Hong Kong's RMB bond market by enlarging the scale of RMB bond market in Hong Kong, helping set the pricing benchmark for other RMB bonds, and increasing the participation of institutional investors,” according to a spokesman at the HKMA

and

China Development Bank will offer on November 25 at least CNY30bn (USD4.5bn) of 5-year financial paper, which comprises of a CNY10bn fixed-rate tranche with a CNY7.2bn greenshoe, and a CNY10bn floating-rate tranche referenced to the 1-year deposit rate with a CNY6bn greenshoe, and a CNY10bn floating-rate tranche referenced to the 3-month Shibor rate with a CNY6bn greenshoe. The purpose of the three-tranche feature is to set benchmark and establish relevancy among different structures for the domestic bond market. Selling concessions are 10bp for all three tranches, and additional 5bp on basic underwriting amounts for the fixed-rate and the 1-year deposit rate linked tranches, but no basic underwriting requirements for the Shibor rate referenced one. Settlements will all be on December 7. Outstanding 5-year fixed-rate policy bank paper was quoted at 3.86% in the secondary market, while CDB’s last 5-year floater tap was a CNY15bn deal on October 28 at 8bp over the 3-month Shibor rate. Prior to the new deals, CDB has raised CNY730.8bn so far this year, surpassing CNY570bn from 23 issues in 2009.