Dim sum bonds, or offshore yuan bonds, will see increasing demand, experts said, thanks to lower financing costs in Hong Kong and tightening liquidity on the mainland.

The dim sum debt sold in the first quarter of this year came to 125 billion yuan ($20 billion), the highest quarterly figure on record, Reuters data showed. That compares with 53 billion yuan for the last quarter of 2013.

But the dim sum bonds in Hong Kong recorded a negative 2.11 percent rate of return in the first three months of 2014, HSBC reported. But the bank expects 0.8 percent gain in the second quarter.

ICBC issues dim sum bonds

Yuan exchange rate's floating range widened

"Currency is a key driver in this market," said Ivan Chung, vice-president and senior credit officer at Moody's Investors Service. He added that the outlook for China's economy as well as its government policies will also influence yield expectation and issuance volume.

Chung said that prevailing weakness in the yuan against the US dollar slowed bond issuance momentum in April, and possibly for the entire second quarter.

To curb the yuan carry trade, the People's Bank of China, the nation's central bank, has engineered a yuan depreciation in the past few months, with a higher daily reference rate. The PBOC broadened the daily floating band from 1 percent to 2 percent on March 17.

To date this year, the currency has lost 2.6 percent against the US dollar, losing almost all of its gains from the past year.

"If the weakness continues, it will inevitably dampen the issuance activities," he said. "Or the bond issuers need to pay a higher yield to attract investors' attention than in previous years."

Economists have voiced differing opinions on the valuation of the yuan, given its frequent fluctuations over the past few months.

Ginger Cheng, managing director for DBS Bank Hong Kong, predicted the yuan would reach six against the dollar by year's end, with short-term volatility.

Kelvin Lau, senior economist at Standard Chartered Bank, said the exchange rate will rise to 5.92 yuan per dollar by the middle of this year.