Capital controls hit China panda bonds

Author: Brian Yap | Published: 16 Mar 2017

China’s RMB136 billion ($19.7 billion) onshore RMB bond market hasn’t hosted a truly foreign issuer since last November. The country’s crackdown on capital outflows are largely to blame, according to market participants.

The National Bank of Canada (NBC) became the first North American foreign issuer to issue a panda bond on China’s Interbank Bond Market (CIBM) in November last year. Previously four other overseas issuers had tapped the CIBM market, but they were either those with major operations in Greater China or had launched a private placement.

The tightening of capital controls on panda bonds by PRC authorities since late November has been cited as a key reason, as applicants planning to use proceeds offshore are struggling to get approval from regulators, such as the State Administration of Foreign Exchange (Safe).

"Whenever we speak to potential issuers, they are all thinking about it but they...



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