RMB Bond Overview
Agincourt Capital is issuing a first-of-a-kind Renminbi (RMB) convertible bond fund offered to Chinese and foreign investors to capture real estate opportunities in Australia – one of the world’s most stable, safe-bet economies. Institutional and high-net-worth individuals can choose their risk and investment theme appetite through the offering of two unique Special Purpose Vehicles (SPV’s):
- Core: Commercial (office)
- Opportunity: Residential and Commercial
RMB Opportunity
During the past several decades, China and Australia have developed strong trading ties and the two economies have become closely linked – China has urbanised quickly and Australia has provided the raw materials (iron ore, coal aluminium, etc.) to facilitate this growth.
Also, Chinese investors have traditionally been very comfortable with real estate as a safe and profitable investment. Likewise, many Chinese view Australia as a safe, stable and attractive investment environment.
In light of these trends and developments, Agincourt Capital is issuing RMB convertible bond funds investing into Australia and then into China and Brazil.
There is currently an estimated $60BN AUD equivalent of RMB cash held in banks in Hong Kong on behalf of investors, many of whom are Chinese nationals. These investors are being paid about 0.5% interest on their money and are looking for higher-yielding investments. The recent emergence of RMB-denominated bonds and a new variant, “Dim-Sum” bonds, which are RMB bonds that are paid in $USD, has created a new way for investors to get a higher yield for their cash while also being exposed to the perceived future currency appreciation of the RMB against the $USD. Money raised by these bonds has primarily been reinvested back into Chinese companies.
The popularity of these new bonds among investors led Agincourt Capital to develop a new and more powerful version of the “Dim-Sum” bond. Agincourt will offer a synthetic, hybrid-secured RMB bond. These are RMB bonds that are settled in $AUD and will be fully secured by real estate assets in Australia. The coupon rate of 4% is much higher than bank interest as well as offer safe bet investment into the Australian economy and its real estate market. Lastly, investors will have the opportunity to convert their investments into direct ownership of the asset when the fund closes after five to seven years.