Start with the benchmark — but do not stop there.
When RMB benchmark rates are below comparable USD rates, the initial funding arithmetic can look compelling. But a corporate borrower does not fund at the benchmark. It funds at the benchmark plus its own credit spread, and may also incur FX, hedging and transaction costs.
The relevant equation is all-in cost.
A useful comparison should include benchmark rates, issuer-specific spread, tenor, repayment profile, currency of revenues, use of proceeds, FX exposure, hedging costs and refinancing implications. The gap that matters is the gap that remains after these items are included.
Timing matters.
The relationship between RMB and USD rates changes. Investor appetite changes too. A CNH financing that is attractive in one quarter may be less compelling later, which is why market-window analysis belongs alongside credit analysis.
This note is general market commentary only and does not constitute investment, securities or transaction advice.