Volkswagen AG intends to sell five-year bonds in as much as 1.5 billion yuan (164 million euros) as soon as today in Hong Kong, becoming the first foreign vehicle company to issue so-called Dim Sum bonds.
The company is planning to price the bonds to yield from 2 percent and 2.25 percent, the company’s Beijing-based spokesperson Andreas Hoffbauer said Monday. According to an insider who declined to be identified, the sale of the unsecured, senior notes is managed by Standard Chartered Plc, Bank of China Ltd., and HSBC Holdings Plc.
This year, companies have sold a total of 40.5 billion yuan of Dim Sum bonds, as revealed in data that Bloomberg compiled.
VW has a 12.8 percent market share of the passenger vehicle industry in China, as disclosed by industry analyst J.D. Power & Associates. The Dim Sum market demand is still “very strong” according to Singapore- based chief financial strategist Kristine Li for Asia ex-Australia at Royal Bank of Scotland Group Plc.
She added that Volkswagen is a “really good quality name,” thus it offers scarcity value if the yield is good. She also stated that China is allowing greater use of its currency worldwide in order to reduce its reliance on the dollar.
It also opened the offshore yuan bond market in Hong Kong last February in 2010. She further explained that Caterpillar Inc., which is the largest manufacturer of construction equipment in the world, sold 1 billion yuan of two-year bonds in Hong Kong last November after McDonald's Corp. sold three year notes worth 200 million yuan in September.