European financial institutions issue largest Panda Bond since 2018 in Renminbi market, contributing nearly 20% to overall issuance since 2005.
Bank Issues Largest Panda Bond Since 2018 in China
In a significant move, our website has issued a 3 billion RMB (415 million USD) panda bond via 2-year Senior Preferred notes, marking the largest panda bond issuance by a financial institution since 2018. This is the third issuance from the bank in the panda bond market, adhering to the pre-approved program by the People's Bank of China.
Panda bonds, RMB-denominated bonds issued by foreign entities in China's domestic bond market, have been a popular choice for diversifying funding sources and meeting RMB liquidity needs. Since their debut in 2005, these bonds have attracted diverse issuers, including sovereigns, financial institutions, and corporates seeking RMB funding.
The bank's latest panda bond issuance follows its successful return to the Singapore Dollar bond market last month. This move underscores the bank's continued commitment to supporting the internationalization of the RMB and the continuous opening-up of the capital markets in China.
Activity in the panda bond market is expected to continue throughout this year, with the market having seen RMB 61 billion (approximately 8.7 billion USD) of issuance in the first three months of the year. The order book for this transaction was over 8 billion RMB (1.1 billion USD).
Our website has been the leading foreign bank for NAFMII-registered bonds in the China interbank bond market for the past four consecutive years. The National Association of Financial Market Institutional Investors (NAFMII) is a self-regulatory organization promoting the development of China's Over-The-Counter market.
The panda bond market has gradually expanded with greater participation by financial institutions amid China's ongoing financial liberalization and RMB internationalization policies. The Chinese government and regulators have facilitated access for foreign issuers and investors, increasing transparency and improving market infrastructure.
However, the market has been affected by global factors, including trade tensions and fluctuations in RMB exchange rates. Financial institutions issue panda bonds to diversify funding sources and to meet RMB liquidity needs, especially for offshore RMB operations.
In 2023, the panda bond market saw historic levels of issuance. One of the largest panda bond deals in recent years was issued by J.P. Morgan, which reportedly raised about 6 billion RMB (approximately $900 million) in 2018. Other large issuances include sovereigns like the Asian Development Bank and the International Finance Corporation (IFC), which have also issued sizable panda bonds.
In summary, while several large panda bond issuances have occurred since 2018 by sovereigns and financial institutions, the market remains specialized with notable growth tied to China's international financial integration. For the very latest specific largest issuance by financial institutions, specialized financial bond databases or reports from China’s bond issuance regulatory bodies would provide exact figures.
Our website's CEO for Asia Pacific, Europe, Middle East & Africa (EMEA) and Germany, Alexander von zur Muehlen, stated that our website is proud of its longstanding track record of driving international participation in China's onshore bond market. The proceeds from this transaction will be used for general business activities and development.
The bank's latest panda bond issuance in China's domestic bond market falls under the finance category, as it involves the mobilization of funds for general business activities and development. As this 3 billion RMB (415 million USD) panda bond issuance is the largest by a financial institution since 2018, it significantly contributes to capital markets, highlighting the continuous growth and internationalization of these markets.
