Synthetic offshore RMB format opens side door for issuers

A synthetic offshore renminbi bond could appeal to a number of property issuers that have difficulty remitting funds back to the mainland.

Bankers are pitching the concept of a synthetic offshore renminbi bond to issuers after property developer Shui On Land last week priced the first such deal in the public market.

The concept of a US dollar-settled renminbi-denominated bond could gain traction among mainland issuers that have assets in renminbi and require funds onshore, but would be unable to obtain approval from the Chinese government to remit the renminbi back to the mainland if they were to tap the offshore renminbi bond market, also referred to as the dim sum bond market.

Given the byzantine regulatory process that issuers routinely face, a synthetic format could make sense, provided the cost of funding is right.

“It is...

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