2012.05.09 06:46:47 MARKET TALK: More Chinese Firms To Tap CNH Market For Funds - CA

0446 GMT [Dow Jones] The CNH, or offshore CNY, spot and forward contracts aren't moving in response to Chinese economic planning agency's rules Tuesday for non-financial domestic companies to issue dim sum bonds. Yet, Credit Agricole believes that the NDRC's formalization of issuing process is likely to encourage more Chinese companies to tap the CNH market amid cheaper funding costs. "This will lead to tighter CNH liquidity later in the year, which should support the CNH in the spot market... and lead to higher forward points," CA says. Barclays suggests to pay for 1-Yr CNH cross currency swap to position for slower CNY appreciation and an ultimate convergence between onshore and offshore bond rates, as offshore funds will be repatriated to mainland more easily. However, ANZ reckons the pace of this convergence will continue to be in the hands of the government. Meanwhile, the scale of the dim sum bond market will expand and its transaction costs and fees could be reduced, ANZ says in a note. (fiona.law@dowjones.com) Contact us in Singapore. 65 64154 140; MarketTalk@dowjones.com (END) Dow Jones Newswires May 09, 2012 00:46 ET (04:46 GMT)