CB plans to launch Panda bonds
The Central Bank (CB) has requested permission from China to issue Chinese Yuan denominated bonds or Panda bonds in a bid to attract Chinese investors, officials said. A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in China. The first two Panda bonds were issued in October 2005 on the same day by the International Finance Corporation and the Asian Development Bank. Officials said the CB has written to the People’s Bank of China, China’s central bank seeking approval for issuing panda bonds. “This is an alternative source of cheap funding where investors can buy Yuan denominated bonds for 5 years instead of the US$ denominated bonds where the rates are comparatively high,” an official told the Business Times.
The Panda Bond market is very much in its formative stages with a total outstanding amount of only US$2.57 billion by just 11 issuers, data as at March this year show. Most of the issuance has occurred since 2H15 when the Chinese regulators opened up the market to allow a wider variety of foreign entities to issue Panda Bonds. The CB request came after a high-level delegation visit to China in which six banks – Bank of Ceylon, Peoples’ Bank, Commercial Bank, HNB, Sampath and Seylan had accompanied CB Governor, Arjuna Mahendran.