Panda-bond market up seven-fold in four years to $52 bln, says ACRA

TASS Russian News Agency | Aug 15, 2019 at 1:13 PM

MOSCOW, August 15. /TASS/. The panda-bond market has soared seven-fold over the past four years as of April 2019 to $52 bln (350 bln yuan), Russia’s Analytical Credit Rating Agency (ACRA) said in a statement on Thursday.

"The panda-bond market began to develop rapidly in 2015, and over the past five years, the total volume of debt securities placed by foreign borrowers amounted to 350 bln yuan. To date, the size of the panda-bond market is comparable with that of the markets of debt securities denominated in other Asian currencies," the agency said.

ACRA expects the panda bond market to grow further, "as more and more companies operating in China and sovereign issuers interested in promoting their image and strengthening ties with the People's Republic of China may apply this debt instrument to pursue their goals," the statement said.

However, the panda-bond market is unlikely to become an alternative to dollar and euro denominated loans in the foreseeable future, the agency added.

High yields, complicated regulatory approval procedures and low liquidity hinder a stronger growth in the panda-bond market, ACRA said.

The transnational auto concern Daimler and foreign governments, including Poland, Hungary and Philippines, are the largest issuers of panda bonds.

Rusal has been the sole Russian issuer of panda bonds to date, while VEB.RF that looked into options for an offering, has abandoned the idea considering it inappropriate amid the current circumstances.