Aggregate bond trading volumes in Europe from its unit Bluestar Finance Holdings Limited have exceeded $186 million for the month to Oct. 17, data from bond trading platform MarketAxess showed. Between March and August, volumes were less than $100 million every month.

China National Chemical Corp, popularly called ChemChina, has not issued bonds in the offshore market so investors view dollar bonds from its subsidiary as a proxy.

Investors are concerned ChemChina is highly leveraged, having aggressively bought assets at home and abroad, but some see its purchase of Syngenta - China's biggest overseas acquisition and strategically important to the government - as giving it more access to funds and positive in the longer run.

A U.S. national security panel has cleared ChemChina's takeover of Syngenta; but even before the deal is finalised, chatter of a possible Sinochem and ChemChina merger has added another twist.

Sources told Reuters the two Chinese state-owned chemical companies are in talks to create a chemicals, fertiliser and oil giant with almost $100 billion in annual revenue. Both companies have denied the merger plans.

"We have seen a lot of trading activity after the Sinochem headlines," said a Hong Kong-based analyst, citing divergent views about the benefits of the merger.

"You get a better stronger, business profile but you use up a lot of debt to fund this expensive transaction."

Fitch has placed ChemChina's BBB-plus rating on "rating watch positive" saying the acquisition lifts its "overall strategic importance to China's agriculture and food industry".

But rival Moody's Investors Service, which rates ChemChina's subsidiary China National Bluestar, has placed it under review for downgrade as the Syngenta acquisition poses "potential deterioration in ChemChina's financial profile".

(Reporting by Umesh Desai; Editing by Jacqueline Wong)