German car manufacturer Daimler became the first
foreign corporate to sell Chinese onshore bonds, so-called
panda bonds, last month. But lawyers believe that unfavourable
pricing will limit future deals.
Corporates have tapped the offshore renminbi market
– the dim sum bond market – in the past for
renminbi-denominated funding. But they must receive permission from Chinese regulators to remit
the currency back onshore. Panda bonds are sold onshore,
where it is easier for issuers to use their proceeds because
they don’t need to be remitted.