China ‘panda’ bond sales double in October amid yuan debt boom

SALES of yuan-denominated “panda” bonds by foreign issuers in China more than doubled in October from a year earlier, official data shows, sustaining a cross-border debt boom underpinned by relatively low Chinese rates and Beijing’s yuan internationalisation drive.

Panda bond issuance totalled 10.3 billion yuan (S$1.9 billion) last month, compared with 4.5 billion yuan a year earlier, according Shanghai Clearing House data.

For the first ten months, panda bond sales were 125.5 billion yuan, surpassing last year’s total of 80.5 billion yuan, and setting the stage for a record year of issuance.

Overseas companies including Crédit Agricole, Mercedes-Benz Group, and Deutsche Bank have issued panda bonds to take advantage of lower financing costs as China has been lowering rates while the US and other developed countries have been tightening monetary policy.

In addition, China has rolled out a series of policies this year to support cross-border financing in yuan as part of efforts to promote global use of the Chinese currency.

Among panda bond issuers last month, the National Bank of Canada sold 1 billion yuan of three-year bonds with a coupon rate of 3.2 per cent.

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The lender, which plans to issue up to 10 billion yuan of Chinese-currency bonds, said the proceeds would be principally used for supporting and financing its Canadian and international clients conducting business in China or with Chinese counterparties. REUTERS