FINANCE

Investors Are Warming to Panda Bonds, Deutsche Bank Executive Says

Published: Aug. 16, 2024 7:11 p.m. GMT+8

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Deutsche Bank’s first two tranches of the debt received lukewarm interest in 2023, but subscriptions have soared this year, according to Samuel Fischer, head of China onshore debt capital markets. Photo: VCG

The increasing popularity of panda bonds issued by Deutsche Bank AG shows a growing interest in the yuan-denominated debt among investors, a senior executive at the banking giant told Caixin in a recent interview.

Panda bonds are yuan-denominated bonds issued by non-Chinese institutions and sold on the Chinese mainland, allowing foreign entities to raise cash there.

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Panda bonds, yuan-denominated bonds issued by non-Chinese entities, have seen significant growth, with 150 billion yuan issued last year, up 82% from the previous year.
Deutsche Bank issued 8 billion yuan in panda bonds within a pre-approved PBOC quota, with increasing investor interest and significant growth in secondary market trading.
Interest in panda bonds continues to grow, with 107 billion yuan issued in the first half of this year, a 49% year-on-year increase.

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Who’s Who

Deutsche Bank AG: Deutsche Bank AG has seen increased interest in its yuan-denominated panda bonds. Since early 2023, they've issued 8 billion yuan, with rising investor subscriptions in consecutive tranches. They tripled their third tranche to 3 billion yuan in April and matched this amount in June. This reflects growing recognition and demand for panda bonds among foreign investors.

Bayer AG: Bayer AG, a German pharmaceutical group, has issued panda bonds, capitalizing on the low cost of yuan financing. This move aligns with a strategic preparation for increased investment in China, driven by the country's industrial upgrades and the rise of emerging industries, as indicated by Deutsche Bank’s Samuel Fischer.

BASF SE: BASF SE, a German chemicals giant, is among the German companies that issued panda bonds, taking advantage of the low cost of yuan financing. This move is in preparation for a new wave of investment in China, as the country experiences industrial upgrades and the rise of emerging industries.

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What Happened When

January 2023：: Deutsche Bank issued its first tranche of panda bonds, worth 1 billion yuan.

December 2023：: Deutsche Bank issued its second tranche of panda bonds, worth 1 billion yuan.

January 2024：: China Chengxin International Credit Rating Co. Ltd. published a report highlighting more than 150 billion yuan ($21.3 billion) in panda bonds issued in the previous year.