Powering the Next Phase of CNH Corporate Bond Trading

Offshore issuance of renminbi-denominated bonds – known as dim sum bonds – is surging again. The increase reflects favorable yields relative to onshore rates, continued support from major financial centers, and China’s push to internationalize the renminbi. In the first half of 2025, the outstanding amount of dim sum bonds climbed more than 60% from three years earlier to RMB1.27 trillion (about USD179 billion).

Hong Kong remains the leading hub for international bond issuance and offshore renminbi trading in Asia. Much of the outstanding volume over the past decade has come from financial issuers, including local government financing vehicles, state-owned entities that raise funds for public infrastructure projects.

Despite Chinese local governments being restricted from issuing bonds directly, issuance from corporate borrowers is rising amid higher demand, led by global companies seeking access to renminbi-based liquidity. Chinese technology firms including Tencent Holdings, Baidu and Alibaba are tapping into this growing offshore market.

In 2024, Alibaba sold its first dim sum bond worth CNH17 billion (about USD2.4 billion); Baidu followed with a CNH4.4 billion (USD616 million) issue in September; and Tencent recently announced plans for a debut offering. With extensive overseas operations, these firms are raising funds at attractive terms to finance offshore investments. About 75% of nonfinancial corporate issuers - mostly from the construction and real estate sectors - are based in mainland China, while foreign issuers, primarily in energy and mining, make up the remainder.

Drivers of Market Growth

The resurgence in dim sum bond issuance reflects economic, structural and policy factors supporting the renminbi’s growing global role.

China launched its cross-border trade settlement pilot in 2009 to promote renminbi use and reduce dependence on the U.S. dollar. Sixteen years on, about 30% of China’s USD6.2 trillion in global trade is settled in renminbi, according to People’s Bank of China Deputy Governor Zhu Hexin – up from only single-digit levels just over a decade ago. For issuers, average yields in China’s offshore renminbi market remain attractive compared with debt denominated in other major currencies, including the U.S. dollar. With China’s economy experiencing some deflation, monetary policy has stayed accommodative for an extended period, narrowing yield premiums on onshore debt.

Developing investment options for renminbi holders is also central to China’s currency internationalization efforts. Investors in Hong Kong, Singapore and Taiwan are among the top buyers of dim sum bonds, while non-Asian investors now account for 8–10% of new issue allocations, a threefold increase since 2022.

At the same time, lower borrowing costs stemming from favorable interest-rate differentials – driven by recent policy bank rate cuts – have pushed CNH yields to historic lows, making it cheaper for issuers to raise funds offshore. This cost advantage, combined with rising international demand and liquidity in the offshore renminbi market, continues to support issuance as global investors diversify away from U.S. dollar exposure.

Meanwhile, the Hong Kong Monetary Authority and Securities and Futures Commission have laid out a roadmap to deepen the region’s fixed-income and currency markets, including the offshore renminbi segment. Their strategy supports the continued expansion of dim sum bond issuance and encourages more issuers to open renminbi counters for stock trading.

Building a Stronger Secondary Market

Authorities are prioritizing the use of next-generation electronic trading platforms tailored to local trading requirements to improve transparency, efficiency and liquidity. These platforms help address key market challenges - bilateral counterparty risk, fragmented price discovery and limited transparency - while increasing investor confidence.

Transparency and liquidity are fundamental to the continued growth and stability of any financial product. Although the dim sum market remains less mature than its onshore counterpart, advances in trading infrastructure are facilitating faster and more efficient price discovery. Bid-offer spreads on offshore renminbi-denominated Chinese government debt have tightened from about 50 basis points in 2020 to below 30 basis points today, highlighting steady market progress.

Continued adoption of electronic platforms such as Tradeweb’s can further strengthen liquidity and transparency across a broader range of CNH instruments.

Meeting Market Demand Through Innovation

Tradeweb continues to expand its platform to meet growing demand for CNH corporate bond trading, offering investors efficient and transparent access to the Chinese bond market. Working closely with market participants, the firm has enhanced tools and workflows to simplify access, deepen liquidity and streamline execution. Sixteen dealers now provide live liquidity on the platform, with more participants set to join soon.

A key differentiator is Tradeweb’s streamlined enablement process. Once clients are approved to trade credit bonds, they automatically gain access to all CNH securities, eliminating the need for individual security-level setup and accelerating time to market.

Tradeweb also offers multiple electronic trading protocols to accommodate varied execution preferences and market conditions. Investors can send simultaneous requests for quotes to multiple dealers to increase competition or use auction-style formats with two-way quotes for discretion.

An increasingly popular feature is Tradeweb’s AllTrade® protocol for All-to-All (A2A) trading, which enables investors to post trading interest to both dealers and institutional clients. This broadens potential liquidity and enhances price discovery, particularly in markets where dealer participation may vary.

Another example is the SNAP IOI protocol, which further extends access by connecting investors to liquidity from wholesale markets, improving hit rates and execution efficiency while minimizing information leakage.

Together, these innovations - workflow automation, multi-protocol flexibility and expanded liquidity access - position Tradeweb as a trusted venue for faster, more transparent execution in one of Asia’s fastest-growing credit markets.

Sustaining Growth Through Technology and Infrastructure

As the CNH bond market matures, continued policy support and improvements in trading infrastructure will be key to sustaining growth. Rising participation from global investors and expanding electronic access are strengthening liquidity and transparency across the asset class. With its integrated platform and range of execution tools, Tradeweb is well positioned to help clients navigate and capture opportunities in this rapidly evolving market.