China's dim sum bonds offer comfort in war chaos

Tencent Holdings

27/04/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Ka Sing Chan

HONG KONG, April 27 (Reuters Breakingviews) - As with their southern Chinese culinary namesake, so-called dim sum bonds are emerging as a feel-good staple for investors amid war in Iran. Issuance of these offshore yuan-denominated bonds in Hong Kong looks on track to top last year's $160 billion record, as technology giants like JD.com 9618.HK tap cheap funding and investors diversify away from the U.S. dollar. It's a perfect recipe for the market to finally take off.

The dim sum bond market has been on a tear this year: volume and values have already reached 40% of 2025 totals, according to data from Hong Kong investment platform FSMOne. Renminbi assets are steadily gaining favour from investors, prompted by turmoil in the Middle East and China's low inflation. It's a boon for Beijing, which has been pushing the dim sum bond market for well over a decade as part of its yuan internationalisation strategy. Until recently, those efforts have stalled, largely due to a shallow and illiquid pool of offshore yuan.

Chinese state-backed issuers still dominate the dim sum bond market. The Ministry of Finance raised 15.5 billion yuan ($2.27 billion) last week, its biggest Hong Kong sale since 2023. But privately held groups, including technology giants JD.com, Alibaba 9988.HK and Meituan 3690.HK, have capitalised on the cheap funding in recent years. Tencent 0700.HK raised $1.3 billion in offshore yuan bonds last year, with yields for the 10-year tranche at just 2.5%, versus 4% for its 10-year U.S. dollar bond sold in 2019. That reflects the widening gap in benchmark rates since 2022: China’s 10‑year government bond yield has hovered around 1.8% in April, far below the U.S. 10‑year Treasury yield of roughly 4.3%.

Moreover, China’s export clout is driving demand for yuan settlement. Trading partners are increasingly tapping both offshore and onshore yuan-denominated paper. Indonesia's inaugural 6 billion yuan dim sum bond sale last year was oversubscribed; Portugal last week became the first euro-area country to tap the offshore renminbi market, raising 2 billion yuan of eight-year debt in a private placement.

Even so, full safe haven status will continue to elude offshore yuan bonds. Over the past decade the offshore yuan pool has nearly doubled to nearly 1.3 trillion yuan in Hong Kong, according to official figures. But capital controls still restrict how freely the currency can move back onshore, meaning investors can't easily recycle their yuan back into Chinese markets or hedge their positions. For now, dim sum bonds offer comfort, not cover, in the storm.

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The fundraising of dim sum bonds, or yuan-denominated bonds sold offshore, reached a record 1.1 trillion yuan ($161 billion) in 2025, according to data published by the Hong Kong Monetary Authority. Chinese tech giants such as Tencent made their debut in the market last year.

Portugal has become the first euro-area country to tap the dim sum bond market, raising the equivalent of about $250 million with an eight-year debt in a private placement, Bloomberg reported on April 16, citing Portugal’s debt agency.

The 'dim sum' bond market is getting much bigger https://www.reuters.com/graphics/BRV-BRV/lgpdgqzdovo/chart.png

(Editing by Robyn Mak; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))