Deutsche Bank obtains China corporate bond underwriting license

The bank will be allowed to underwrite corporate bonds in China's Interbank Bond Market

DEUTSCHE Bank today has received approval from the National Association of Financial Market Institutional Investors (NAFMII) to underwrite corporate bonds in China’s Inter-bank Bond Market (CIBM). The approval enables the bank to underwrite debt financing instruments for both onshore and offshore issuers.

Deutsche Bank holds market-making and bond settlement licenses on CIBM and Bond Connect.

The license cements the bank's status as one of only a handful of full-service foreign banks in China, according to Werner Steinmueller, Deutsche Bank Asia Pacific CEO. “The ability to help offshore and onshore clients issue primary debt in China provides an important additional facet to our full suite of capabilities in the world’s third largest fixed income market. We remain committed to our pioneering platform in China, and intend to keep building on our offering for clients in this critical market.”

According to Wind, as of the end of June 2018, CIBM reached a combined size of over 78.7 trillion yuan with a net new issuance volume of 4.1 trillion yuan in the first six months of this year of which 10% went to foreign investors. Deutsche Bank expects RMB bond investment flows to reach 4.6 – 5.3 trillion yuan over the next five years.

As the Panda bond market grows, international corporate clients are looking to tap the onshore market for funding their domestic business. The People’s Bank of China published new cross-border financing rules in 2017, which makes it easier to use funds raised via Panda bonds for financing onshore operations, while also allowing proceeds to be remitted outside the country.