First foreign banks to issue “panda-bonds” in China
(25 September 2015 – China) HSBC Holdings and Bank of China have been approved by China’s central bank to issue 1 billion yuan (A$222 million) and 10 billion yuan, respectively worth of “panda bonds”.
The People’s Bank of China (PBoC) has never previously allowed a foreign commercial bank to sell panda bonds in its rapidly growing but largely closed market. Only a handful of foreign borrowers, including the International Finance Corp., the Asian Development Bank and Daimler, have been allowed in by Beijing.
Approval of the banks follows months of volatility in Chinese markets, as investors’ concerns about the country’s economic outlook have grown.
According to the PBoC, the move will “further expand the range of issuers in interbank bond market and widen international commercial banks’ channels to renminbi financing,”
Adding that it will “benefit the opening up of the bond market and enhance the cross-border use of the renminbi.”
HSBC’s chief executive for Greater China said the approval by PBOC “could signal the opening-up of an alternative source of funding for global borrowers,”
As it pushes for the renminbi to be granted reserve status by the International Monetary Fund, hence broader international use, China has recently fast-tracked the opening of its capital markets by allowing more foreign investors to buy its stocks and debt.
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