More high-grade Western multinationals are expected to tap the "dim sum" bond market in the wake of Caterpillar's record deal this week, drawn by hopes that Beijing will make it easier to bring yuan raised in the offshore market back to the mainland.

U.S. blue-chip Caterpillar sold a blockbuster 2.3 billion yuan ($355 million) bond on Wednesday in a big vote of confidence that the offshore yuan bond market is becoming a sustainable financing avenue rather than a flash in the pan.

The dim sum bond issue was the biggest ever by a foreign multinational firm, and Caterpillar was the first foreign borrower to make a repeat visit to the offshore yuan market. The People's Bank of China is also doing its bit to spur more activity.

In a circular last month, the central bank provided guidelines for yuan-denominated foreign direct investments into the mainland, even going so far as to spell out the nature of such investments, spreading optimism that the process of bringing yuan raised outside China back into the country would soon be streamlined.

Currently, approvals for transferring yuan across the border can take months, with issuers having to do the rounds of various government offices to secure necessary permits.

More repeat issuers will benefit the secondary market for dim sum bonds.The fact that multinational companies are usually investment grade credits and the deals are off their respective medium-term note plans -- a mechanism which allows them to issue bonds quickly without having to secure approvals repeatedly -- almost guarantees good liquidity in the secondary market.

Both McDonalds Corp and Unilever have showed their intentions to tap the so-called "dim sum" bond market a second time, and may do so in size after Caterpillar's deal.

"The return of a prominent international issuer like Caterpillar sent a strong message to the world that the Dim Sum bond market is competitive and viable for multinational corporations," said Tee Choon-Hong, regional head of capital markets, North Asia, at Standard Chartered Bank.

The mandarins in Beijing probably couldn't agree more.

·         In secondary market trading, Caterpillar's second yuan bond traded up to as much as 100.20 after being sold at par. It was priced at the lower end of a final guidance of 1.35 to 1.425 percent and attracted interest from about 80 accounts.

·         Spreads between offshore and onshore yuan have begun widening after virtually disappearing in May in a sign that market expectations are building up that policymakers may let the yuan rise more rapidly to check inflation. However, it still remains well below a record 0.05 yuan hit last November.

·         Property developer Ascendas Group plans to raise $300-400 million by listing its three Shanghai commercial properties in Hong Kong via a yuan-denominated real estate investment trust (REIT). Bankers would be hoping for a better response than billionaire's Li Ka-shing's Hui Xian REIT, which raised about $1.6 billion in March but tanked on debut.

·        Different playing fields. Even though issuers have displayed a preference for selling yuan denominated bonds rather than synthetics -- bonds issued in yuan but settled in U.S dollars -- the problems in remitting funds across the border makes it difficult to rate such debt, ratings agency Moody's said in a recent note.