Historic milestones on China’s road to open capital markets
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Historic milestones on China’s road to open capital markets

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China’s opening capital markets are unlocking a world of opportunity for investors and building bridges with businesses and governments on every continent. The Bank of China is at the heart of these initiatives to create pioneering new global partnerships.


When Daimler launched a Rmb500 million panda bond to an enthusiastic reception from Chinese investors five years ago, it was much more than just another deal. It was a major milestone in China’s road to opening its capital markets.

The luxury German carmaker was the first foreign company to issue a corporate panda bond in China, providing it with funds to manufacture the Mercedes C-class car in Chinese factories while opening a new dimension of opportunity for Chinese investors.

The pioneering bond issuance was underwritten by the Bank of China (BOC) and set the benchmark for foreign non-financial corporations to raise funds in the booming China market. Since that landmark deal, BOC has steered a host of similar deals to success.

Building global partnerships

The scale and extent of panda bonds has grown exponentially since the pioneering Daimler offering which caught the investment world’s imagination. By the end of December 2018, 43 panda bonds had been issued in the inter-bank bond market with a total value of Rmb74.66 billion for the year.

BOC has remained at the heart of the movement, acting as main contractor for 21 companies with an underwriting scale of Rmb20.768 billion and a market share of nearly 28% in 2018, making it the largest player in the market. BOC has also been responsible for 16 white panda debts – panda bonds issued for overseas issuers – with a dominant market share of 55.91%.

Less than two years after the Daimler issuance, another milestone was passed as British Columbia in Canada became the first foreign sovereign government registered to issue panda bonds in China’s interbank market. The Rmb1 billion initial issue was, once again, handled by BOC.

Six sovereign issuers – Poland, Hungary, the Philippines, the Emirate of Sharjah, British Columbia and South Korea – have now issued sovereign panda bonds worth a total of Rmb16.46 billion and BOC acted as lead underwriter for all but one of the issuances.

The Rmb1.46 billion Philippines deal was the first southeast Asian sovereign panda bond and was more than six times oversubscribed, attracting a rush of interest from investors around the region.

Once more, BOC served as the lead underwriter and sole bookrunner for the bond issuance, building on a deep relationship with the Philippines, which BOC has supported in a number of initiatives including the development of the RMB spot market in the country.

Solid foundations for Belt and Road alliances

BOC’s lead role in the opening of China’s capital markets is built on solid foundations. The bank has a history of more than 100 years and is the most internationalized and diversified bank in China, with more than 11,000 branches and subsidiaries in 57 countries and regions worldwide.

It is Asia’s top underwriter for G3 and RMB issuance, the only leading underwriter in both China onshore and offshore markets and the only underwriter to lead all types of panda bonds from corporate to sovereign bond issuances.

BOC’s dominance in the market is underpinned by its ability to act as a one-stop underwriter in both of the onshore and offshore markets, the integrated service of its global platform, its global investor base with strong coverage across Asia, and its professional and dedicated debt capital markets team.

These deals take on a profound significance as China expands its international connections through the Belt and Road initiative that has seen China spread its influence to a host of new partners.

As the opening of China’s capital markets gathers pace, BOC is playing a driving role and helping create a stratosphere of new possibility for foreign companies, governments and investors in an increasingly interconnected financial universe.

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