Issuance of renminbi-denominated bonds by central and eastern European borrowers remained muted last year, with just three panda deals making it to market. Of these, two were launched by Russian aluminium producer Rusal, which in March 2017 became the first international company to make a private placement on the Shanghai Stock Exchange.
The initial offering, which had a tenor of three years and a step-up coupon, raised Rmb1 billion ($145 million). This deal size was doubled from the original target of Rmb500 million in response to strong demand from Chinese investors.
The deal was sole led and underwritten by China International Capital Corporation (CICC), which arranged nearly 100 investor meetings for Rusal in Beijing, Shanghai and Shenzhen. It came on the back of Rusal’s registration of a prospectus for panda bond issuance totalling up to Rmb10 billion with a tenor of up to seven years in early 2017.
CICC also helped secure a AA+ rating for the commodities producer from China Chengxin Securities Rating Company, one of the country’s largest credit rating agencies, as well as Rmb2.4 billion worth of guarantees from China United SME Guarantee Corporation that allowed for an issue rating of triple A.
Rusal followed up with a second panda bond issue in September 2017, which used the same format as the first and raised a further Rmb500 million. Proceeds from both deals were used to refinance debt and for working capital needs, including procurement from Chinese suppliers.
The bonds were not only the first in panda format from a CEE corporate borrower but the first to be sold in renminbi by a non-sovereign issuer from the region since 2014.
CICC played a crucial role in facilitating the deals, including ensuring the support of the China Securities Regulatory Commission, the Chinese central bank and the State Administration of Foreign Exchange.