China’s growing credit market to spill over into Islamic deals? (By IFN)

See: http://redmoney.newsweaver.co.uk/12pmp89o43vh38rwoni3wx?email=true&a=6&p=23052165&t=21032255

CHINA: The recent move by the Hong Kong government to proceed with draft amendments ultimately aimed at creating a fairer market between Sukuk and conventional bonds may prove astute as China sees further interest from Muslim markets as a source of funding.

Emirates NBD (ENBD), which issued a US$500 million Sukuk in January this year, has come to the market as the Middle East’s first issuer of Chinese yuan-denominated debt, dubbed dim sum bonds.
On the 21st March, the bank issued CNY750 million (US$119 million) three-year conventional notes, priced at 4.88%, followed by a CNY250 million (US39.54 million) tranche on the 24th March.
The issuance came on the heels of Malaysian sovereign wealth fund Khazanah Nasional’s US$357.8 million exchangeable Sukuk issuance on the 15th March. The Sukuk is convertible into shares of Khazanah’s Hong Kong-listed Parkson Retail Group.

Apart from Hong Kong’s draft amendments for Sukuk, China has also implemented a slew of measures aimed at gradually liberalizing its currency.
Its latest move involves the expansion of quotas for US dollar and Chinese yuan qualified foreign institutional investor schemes; and also includes a pilot program allowing offshore funds to raise Chinese yuan funding onshore for offshore investment. “If implemented, [this] would open up a new onshore-to-offshore cross-border investment channel,” said HSBC in a report on the 5th April.

As China loosens its grip on its currency and sees continued and growing foreign interest for funding and investments, it could just be a matter of time before the country entices more Islamic transactions; especially as entities seek more diversified funding in the wake of slowing credit from the west.