The Panda Bond is a Renminbi (RMB)-oriented bond issued by international institutions in the domestic market of China. A number of foreign government quasi-issuers and corporations have registered such Panda Bonds in inter-bank bond market between the interval from September 2005 to the beginning of 2019. The total value exceeded 120 billion RMB and the issuance volume was more than 70 billion RMB.
When a foreign institution would issue bonds in the currency of a country in domestic market of that country, these bonds are often named by symbols representing that country. RMB bonds issued outside of China are Panda Bonds, which are to be valuated by the currency of Chinese Yuan. Japan also has this type of yen-denominated bonds as the Samurai Bond, the same case can be seen in the US Yankee Bond and the Bulldog Bond in the UK. These bonds are valued according to their national currencies respectively.
Subsequent to Panda Bonds issuance by Poland, Hungary, Philippines, UAE and so forth, Portugal, as a euro-zone country, also issued 3-year bonds worth of 2 billion RMB in China, which are indeed the Panda Bond. The value is approximately 260 million Euro with an annual coupon rate at 4.09% and a subscription of 3.156 times.
What about the future trend of the Panda Bond? The Panda Bond has seen a stable growth in recent couple years. The total issuance amounted to 95.6 billion RMB in 2018. By the end of 2018, 41 foreign issuers have registered the Panda Bond in the registrar. Speaking of bond transactions, the Bond Connect that has come into life for more than two years should not be ignored. The Panda Bond is quite popular on the Bond Connect platform. The Bond Connect also helps the Panda Bond to optimize investor structure.
The One Belt One Road (OBOR) progression has also benefited from the Panda Bond, especially during the current years when China opens its financial market. A number of OBOR countries and regions are gradually drawn to the Panda Bond with growing interests, which could substantiate the group of issuers and enlarge its financing capacity.
The Panda Bond can be one of the good options to utilize for a better allocation of assets for investors. Would you be interested to look at other good options? Then please stay tuned for our next update on other securities and bonds.
Global Connect Admin B.V. | Xuan Hao