Weaker standards taking steam out of dim sum bonds

Poor disclosure and weak covenants are constraining demand for offshore renminbi bonds. The growth in new issuance is expected to slow to less than 100% this year, even though investors are hungry for exposure to China’s growth as an alternative to the uncertainty in developed markets, according to Fitch.

That would be considerably lower than the explosive growth last year, when dim sum issuance rose to $14 billion, up from $5.4 billion in 2010, according to Dealogic. However, that headless rush to renminbi assets led to a lowering of standards among some borrowers, as investors were willing to buy almost anything that was put in front of them....