Singapore dim sum battle leaves bitter taste

It should have all been so simple. On May 23, DBS said it was planning to issue an offshore renminbi bond to be listed and cleared in Singapore, a first for the dim sum debt market. But in doing so it alerted its rivals and started a scrap among investment banks trying to be the first to plant their flag in the market.

Sure enough, on May 27 HSBC swooped in to execute a deal a Rmb500m ($81m) two year deal that closed at around 2pm in Asia.

The contest didn’t end there, though. Standard Chartered was determined to win something, and so although its Rmb1bn three year transaction closed a few hours after HSBC’s, the bank was able to crow that its bond would be the first Singapore-cleared dim sum deal to list because its settlement date was slated for May 31, earlier than HSBC’s June 5.

Meanwhile, poor old DBS. It has lost out in its own backyard, and there is no news yet about when its bond may come.

Rival bankers, meanwhile, are rolling their eyes at what they say is a lot of fuss about not very much. In the end, the purpose of this tit-for-tat is more about giving bankers another selling point to new clients, demonstrating their commitment to the market by being the first to settle in Singapore. How the deals went matters rather less. An advertisement for capital market prowess this ain’t.

It is, in fact, hard to judge the success of these deals. In a break from its normal routine, HSBC did not publicise the orderbook size or the investor breakdowns on its bond, and has shied away from providing them when requested. Its deal is also shorter than most public dim sum bonds. Now that the market has matured, they are typically at least three years.

StanChart did provide some colour, although limited itself to saying it received Rmb3bn in bids from 75 investors. HSBC and Standard Chartered’s bonds were last quoted at 100.10/20 and 100.125/150, respectively, as Euroweek Asia went to press.

One question is why banks such as HSBC and StanChart, which lead Dealogic’s offshore renminbi bond table, are getting their knickers in a twist about a couple of small deals with a Singapore listing. But while the market may be small, banks are positioning for when China finally opens up its economy. With that in mind, no victory is seen as too small.

But the real measure of success will come from how banks go about capturing new deal flows. The fact that Singapore serves as a financial gateway to Southeast Asia will give banks a whole new set of clients itching to get renminbi funding and services. But this week’s game of one-upmanship helps nobody’s cause.

Singapore dim sum battle leaves bitter taste