Foreign Companies Bypass Hong Kong Prefer CNY Swaps

Foreign companies are increasingly using cross currency swaps to fund onshore operations in China rather than raising money via the Dim Sum bond market in Hong Kong.

Multinational companies said that they could raise more money, more quickly and more cheaply by borrowing in dollars and swapping the money into yuan than if they borrowed directly in yuan through the offshore yuan-denominated bond (Dim Sum) market in Hong Kong.

“We swap from euros into renminbi for the maturity we want, which is a very straight forward treasury technique and that means we can have a fixed rate interest loan into China,” said a regional treasury head in Asia at a multinational firm who declined to be named as he was not authorized to speak to media.

via Reuters

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