Primary issuance of CNH bonds has been very week. Gross issuance in JanuaryApril 2015 was CNY 151bn, down by 46% from the same period last year. Although the situation has been improving recently, YTD net issuance of CNH bonds is still negative. Outstanding CNH bonds were CNY 719bn as of end-April, a 7% drop from CNY 776bn at end-2014. Specifically, outstanding Dim Sum bonds have slid by 10% since the start of the year to CNY 674bn, while Formosa bonds have risen 47% to CNY 45bn. Standard Chartered estimates annual issuance of CNY 480-500bn, down from CNY 564bn in 2014. A recovery in the CNH primary market is expected in the coming months, but issuance will likely lag last year’s owing to lower onshore funding costs.An outstanding CGBs of CNY 95.4bn at year-end (currently: CNY 80.5bn) is expected. Their share of the total CNH bond market will likely remain unchanged or a touch lower (currently: 10%). Indeed, this share has been persistently declining from a peak of 23% in 2010.
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