Ruble Crisis Hits Dim Sum Bonds in Hong Kong

© AP Photo / Vincent YuHong Kong Exchanges
Hong Kong Exchanges - Sputnik International
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Dim Sum bonds held by two major Russian banks depreciated significantly during Hong Kong’s trading.

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MOSCOW, December 17 (Sputnik) — The ruble’s sudden depreciation in the past two days has caused global spillovers, reaching Hong Kong, where Russian corporate bonds lost some of their value.

The renminbi-denominated Dim Sum bonds hit a 15-month low as a result of Russia’s financial turmoil as bonds issues by Russian banks including Gazprombank and VTB Group slid 1.65% in December, according to Bank of America Merril Lynch’s Dim Sum Index. 

From the beginning of this year, Russian Dim Sum debt depreciated by 2%, while the other 22 nations participating in the Dim Sum scheme saw an increase their bonds’ value.

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“Oil is the spark for the big correction in credit markets and Dim Sum bonds are no exception,” Steve Wang of Hong Kong-based BOCI Securities Ltd. told Bloomberg “There’s no quick solution for the Russian crisis.”

Gazprombank’s 1 bln renminbi ($161 mln) stock of 4.25% January 2017 Dim Sum bonds depreciated to 89.4% on December 16. Yields rose 9.9% compared to late November. These bonds depreciated by 2.8% in December and 7.1% this year.

VTB Group’s 2 bln renminbi stock of 4.5% October 2015 bonds fell by 2.8% to 95.9% of their initial value. Yields rose to a record 9.5%.

Dim Sum bonds are renminbi-denominated debt equities issued outside of mainland China. These bonds are traded mainly in Hong Kong and are popular among international companies seeking renminbi-denominated assets.

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