Fitch: Issuance of Dim Sum bonds falls

Issuance of offshore Chinese yuan bonds, known as "Dim Sum" bonds, slowed by 55 percent year-on-year over the first 10 months of 2012 because the potential appreciation of the yuan is no longer a strong enough argument in itself to convince investors to buy them, according to a report by Fitch Ratings.

The proportion of entities issuing yuan bonds with an international rating has increased substantially, indicating that credit fundamentals, including covenant protection and transparency, are now playing a much more significant role, the report said.

The issuance of 68.8 billion yuan ($11.02 billion) in yuan bonds out of Hong Kong between January to October is well below the 153.5billion yuan in the corresponding period of 2011 and implies that total issuance in 2012 will struggle to reach half of 2011's 174.1billion yuan.

So far in 2012, only 39 entities have issued Dim Sum bonds, versus 99 in 2011 and 20 in 2010. The issuance of yuan bonds fell to 19.6 billion yuan in the third quarter of 2012 from 38.8 billion yuan in the second quarter and 9.2 billion yuan in the first quarter, the report said.