Issuance of panda bonds hits 66 billion yuan

THE issuance of panda bonds or yuan-denominated bond issued by foreign financial institutions in China has reached 66 billion yuan ($9.12 billion) as of April 14 this year, up 128.36 percent year on year, data from financial information service Wind showed, underscoring the allure of China’s low-cost borrowing market for offshore issuers.

Last week, Deutsche Bank AG issued the largest round of panda bonds by a financial institution in six years. According to a statement on its website, the bank issued its third round of panda bonds on April 11, raising 3 billion yuan via two-year Senior Preferred notes. The transaction attracted an order book of more than 8 billion yuan, drawing robust investor demand and priced attractively versus existing Deutsche Bank debt.

“It has been a positive start to the year for the panda bond market, with 61 billion yuan of issuance in the first three months. We continue to see strong levels of interest from both European and emerging market issuers, looking to tap into the [Chinese] market,” Samuel Fischer, Deutsche Bank head of China Onshore Debt Capital Markets, was quoted as saying in the statement.

A total of 29 panda bonds were issued as of April 14, Wind data showed, maintaining the hot panda bond market since the beginning of 2023. In 2023, the issuance of panda bonds surpassed 150 billion yuan, hitting a record high.

Observers said that panda bonds will continue to increase their attraction based on the differentiated interest rate environment of China and abroad, with a high-liquidity domestic bond market at relatively low financing cost. Also, the accelerated internationalization process and international trade status of the Chinese yuan have promoted the development of the Panda bonds market, thanks to China’s policies supporting financial market opening up.

It is expected that the momentum behind the booming panda bonds market will sustain this year, with the steady internalization of yuan, advantages in yuan financing as well as improvement in relevant systems and mechanisms, observers said.

The issuance of panda bonds is expected to steadily increase in the coming months. Issuers and investors of the Panda Bonds will be further expanded supported by the optimization of the bonds market, the observers noted.