China's offshore renminbi debt market - commonly known as "the dim sum market" - could greatly increase its depth and breadth, said Standard & Poor's Ratings Services in a report released on Aug 30.

"The market's long-term success would require increased issuance from China's Ministry of Finance, the adoption of best practices from developed markets, and the participation of more institutional investors and nonbank state-owned enterprises," said Ping Chew, managing director and head of Greater China at the international rating agency.

"Tapping the broader field of global institutional investors would enable the market to accelerate its growth. Key elements to achieve this include the introduction of standard covenants that continue for the life of the bond, legal certainty, and increased transparency and accountability," he said.

The cumulative outstanding issuance in the dim sum market in Hong Kong has grown quickly over the past two and a half years to 323 billion yuan ($50 billion) from 3 billion yuan.

But S&P expects the recent decline in offshore renminbi deposits to dampen prospects of an acceleration of renminbi bond issuance, at least in the near term.

The report said that the development of offshore renminbi markets beyond Hong Kong, particularly in London, is setting the stage for the long-term positioning of the renminbi as a legitimate global trade currency, with the possibility of 24-hour trading.

"Healthy demand for offshore renminbi bonds from Europe is indicative of the long-term potential of these markets," Ping said.