Financial institution secures largest Panda Bond issue since 2018, reinforcing European dominance in Renminbi bond financing, contributing almost 20% of total issues since 2005.
In a significant move, a leading global financial institution has recently issued a panda bond, marking the largest such issuance by a financial institution since 2018. This announcement underscores the institution's commitment to China's Over-The-Counter market, as the National Association of Financial Market Institutional Investors (NAFMII) is a self-regulatory organisation that promotes the development of this market.
The panda bond, amounting to 61 billion renminbi (approximately 9.2 billion US dollars), was issued in the first three months of 2023. The bond was issued as part of a pre-approved program by the People's Bank of China, and the issuance was successful, attracting strong interest from European and Emerging Market issuers.
The transaction, which was for 2-year Senior Preferred notes, raised 3 billion renminbi (415 million US dollars). The proceeds from this issuance will be utilised for general business activities and development.
Panda bonds are a unique financial instrument, as they are bonds issued by foreign entities in mainland China, allowing them to tap into the domestic RMB bond market. This latest issuance follows the bank's return to the Singapore Dollar bond market last month, highlighting its continued engagement with the Asian financial markets.
The bank's successful panda bond issuance is a testament to its strong position in the China interbank bond market. For the past four consecutive years, the bank has been the leading foreign bank for NAFMII-registered bonds, including local and panda bond issuers. The transaction attracted an order book of over 8 billion renminbi (1.1 billion US dollars), demonstrating robust investor demand.
Alexander von zur Muehlen, the CEO for Asia Pacific, Europe, Middle East & Africa (EMEA) and Germany, and Member of the Management Board at the institution, expressed pride in the bank's longstanding track record of driving international participation in China's onshore bond market. This latest panda bond issuance further cements the bank's role in supporting the internationalization of the RMB and the continuous opening-up of China's capital markets.
The panda bond market has seen historic levels of issuance in 2023, with activity expected to continue throughout this year. As the largest panda bond issuance by a financial institution since 2018, this latest transaction underscores the growing importance and attractiveness of China's domestic RMB bond market to global financial institutions.
Finance played a significant role in the latest transaction, as the leading global financial institution successfully issued a panda bond worth 61 billion renminbi (approximately 9.2 billion US dollars) in the first quarter of 2023. This move highlights the institution's continued engagement with China's capital markets, given its leadership position in China's interbank bond market for the past four years, particularly in panda bond issuances.
