Member News
Growth on horizon as panda bonds attract new investors around the globe
The
panda bond market, in which overseas institutions issue renminbi bonds in
China's onshore market, is poised to attract new issuers. On July 22, the Bank
of China, as the lead underwriter and lead book runner, assisted Hungary in
issuing 5 billion yuan ($698 million) of panda bonds in the Chinese interbank
market. This issuance is the largest single sovereign panda bond in the panda
bond market and the first five-year sovereign panda bond.
The
bond is divided into two tranches: a three-year tranche of 4 billion yuan with
a coupon rate of 2.5 percent and a five-year tranche of 1 billion yuan with a
coupon rate of 2.9 percent. The issuance marks the deepening financial
cooperation between China and Hungary and is of significance for expanding the
panda bond market and attracting international issuers, BOC said.
Hungary
is the first European country to sign a Belt and Road Initiative cooperation
document with China and the partnership between China and Hungary in areas such
as trade, finance and green energy has continued to deepen in recent years. In
2017, with the assistance of BOC, Hungary issued its first Bond Connect
sovereign panda bond, becoming one of the first batch of Central and Eastern
European issuers to enter the Chinese bond market. With cumulative issuance
reaching 11 billion yuan, it marks the largest sovereign panda bond issuer in
terms of cumulative issuance size and outstanding bond volume.
The
Panda Bond is an RMB-denominated bond from a non-Chinese issuer, which is sold
on the Chinese mainland. BOC, as the lead underwriter, recently assisted Morgan
Stanley in the targeted issuance of 2 billion yuan of five-year panda bonds in
the Chinese interbank bond market. This issuance is the first panda bond issued
by a company headquartered in the United States. It has attracted subscriptions
from a diverse range of investors, becoming an example of high-quality assets
for interbank market investors.
As
one of China's largest bond underwriters, BOC has been relying on its global
bond underwriting and distribution network to serve various entities in issuing
multi-currency bonds in domestic and international markets.
As
of the end of June, BOC has assisted more than 70 foreign issuers in issuing
nearly 300 panda bonds, with a total financing amount exceeding 570 billion
yuan.
On
Nov 24, 2022, Mercedes-Benz Financial Services issued the first green panda
bond in the Chinese interbank market, with an issuance size of 500 million
yuan, a term of two years and a coupon rate of 2.9 percent. This is the first
green bond issued by Mercedes-Benz outside the European market, and the company
is also the first automotive company to issue green panda bonds in China.
In
Africa, as the lead underwriter and lead book runner, BOC assisted Egypt in
issuing 3.5 billion yuan of sustainable panda bonds in 2023, achieving a
breakthrough in panda bonds issuance in Africa. This is also the first
sustainable sovereign panda bond and the first sovereign panda bond with a
guarantee structure. Since the beginning of 2025, BOC, as the lead underwriter
and lead book runner, assisted the African Export-Import Bank in issuing 2.2
billion yuan of panda bonds, achieving the first issuance breakthrough for a
multilateral development institution in Africa.
On
Nov 14, 2024, Suzano International Finance B.V. issued 1.2 billion yuan of
green panda bonds in the Chinese interbank bond market, with a term of three
years. This bond issuance is Suzano International Finance B.V.'s first issuance
of RMB panda bonds in the Chinese interbank bond market, and it is also the first
panda bond issued in South America.
To
date, the cumulative issuance of panda bonds has exceeded 1 trillion yuan,
becoming a key force for serving high-level opening-up of China. It has
enriched the diversified financing systems related to the BRI and attracted
international issuers to participate in its regular domestic issuance. As a key
participant in the capital market, BOC said it will continue to leverage its
global service network and cross-border business advantages to contribute to
the opening-up of financial markets.