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Treasury & Capital Markets
The problems with panda bonds
Panda bonds have shown promise over the past year, with sovereign issues from the Republic of Poland and corporates such as Veolia. However, the market has a long way to go before it is truly an attractive market for foreign issuers.
Darryl Yu 18 May 2017

Panda bonds have shown promise over the past year, with sovereign issues from the Republic of Poland and corporates such as Veolia. However, the market has a long way to go before it is truly an attractive market for foreign issuers. Speaking at The Asset 11th Annual Asian Bond Markets Summit in Shanghai, experts gave insights on how to further expand the panda bond space.

Panellists at The Asset 11th Asian Bond Markets Summit in Shanghai

Account standards can be problematic for panda bonds. Currently foreign issuers who look to tap the onshore bond market in China have to follow Chinese account standards and all documentation has to be in Chinese. “Panda bond account standards is only a big concern for issuers in the US,” explains Ricco Zhang, director, Asia-Pacific at ICMA.

Echoing his comments, Irina Burukina, principal professional, treasury, at the New Development Bank stressed the need for sound regulations: “It’s very important to have clarity in the regulations around the panda bond market,” she says.

There has also been a lack of genuine panda bond issues. Currently, a good chunk of panda bonds have been from the offshore units of Chinese-headquartered companies and not foreign entities accessing the Chinese market for the first time.

“Around 40% of these panda bond issuers are actually Chinese institutions. We need to expand the market and make it liquid,” says Nie Ni, research director at China Lianhe Credit Rating.

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