What’s new: Deutsche Bank AG has issued the largest panda bond by a financial institution in six years, as China’s interest rate cuts have lowered the cost of yuan-dominated debt, making it more appealing to overseas businesses.
The issuance of two-year senior preferred notes raised 3 billion yuan ($415 million) and drew in an order book of more than 8 billion yuan, Deutsche Bank announced in a statement Thursday. This is the lender’s third panda bond issuance.
“It has been a positive start to the year for the panda bond market, with 61 billion yuan of issuance in the first three months,” Samuel Fischer, head of China onshore debt capital markets at Deutsche Bank, said in the statement. “We continue to see strong levels of interest from both European and emerging market issuers, looking to tap into the market.”
The background: Panda bonds are yuan-dominated bonds issued by a non-Chinese institution and sold on the Chinese mainland, allowing foreign entities to raise cash within the country.
China’s continued push for the internationalization of the redback has also contributed to panda bonds’ renewed momentum. The yuan remained the fourth-most active currency for global payments by value in February, a position it had held for four straight months since surpassing the Japanese yen in November, figures from the Society for Worldwide Interbank Financial Telecommunication show.
Data from the Shanghai Clearing House show that the balance of panda bonds in its custody rose to 225.7 billion yuan at the end of February from 195.4 billion yuan at the end of last year.
Contact reporter Qing Na (qingna@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)
