Red-chips turn to China's onshore bond market

The parent company of Hong Kong-listed China Merchants Holdings International last week raised Rmb4 billion $587 million from the sale of 10-year bonds in China's domestic bond market. The proceeds will be lent to the Hong Kong-listed subsidiary to be used to expand its business, which is focused on ports and ports-related services. The transaction is part of a new trend in which Hong Kong-listed red-chips are taking advantage of the ample liquidity and lower interest rates in China to fulfil their capital raising needs.

Two other Hong Hong-listed companies, conglomerate China Resources and power producer Huaneng Power International, also sold domestic bonds last week with China Resources raising Rmb5 billion from a 10-year bond...