Hang Seng Indexes and Markit have teamed up to jointly launch the Hang Seng Markit iBoxx Offshore RMB Bond Index family, a new benchmark series that track the performance of offshore renminbi bonds. The new underlying is aimed at international investors with interest in renminbi assets and was designed to be used as the basis of index-linked products.

The new index family includes more than 600 indices covering 260 dim sum bonds in circulation, bonds denominated in renminbi issued outside of China, together with seven major indices that track the performance of renminbi corporate bonds, government bonds, non-sovereign bonds, large cap bonds, high yield bonds, investment grade bonds and overall renminbi bonds.

The indices also provide detailed information to support different aspects of the investment process, including research and asset allocation as well as risk management and reporting functions for bond-based investment products. “[The indices] can specifically be used by structured products desks which can source the fixed income research at the banks,” said a Hang Seng Indexes spokesperson.

According to Vincent Kwan, general manager at Hang Seng Indexes, the new family of indices meet the specific needs of regional and international investors seeking to participate in the fast growing offshore renminbi bonds market. “This asset class is growing rapidly in Hong Kong and we are excited to include it in our extensive range of index solutions,” said Kwan. “The bond index series are categorised by bond tenor, credit quality, sector and size based on feedback from more than 15 asset managers and banks.”

The offshore renminbi debt market is one of the fastest growing bond markets in the world. The aggregate notional value tracked by the index increased by 27% year-on-year to CNY237bn ($38.7bn) in 2013, and by a further 33% this year to CNY316bn ($51.6bn) as of September 30.

Kwan also said that the size of the underlying bonds has already surpassed CNY300bn ($49bn), 67% of which are non-sovereign bonds, 13% high yield bonds and 20% unrated bonds. “We use a specific methodology to handle the calculation of unrated bonds, which allows investors to understand their value and include unrated bonds in their analysis,” he said.

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