China releases highly anticipated provisional Panda bond guidelines
The People’s Bank of China (“PBOC”) and the Ministry of Finance (“MOF”) have recently released the highly anticipated preliminary Panda bond guidelines (the “Guidelines”), which took effect immediately. According to the PBOC, the aggregate value of Panda bonds issued in China’s Interbank Bond Market (“CIBM”) from 2005 to August 2018 is RMB178.16 billion (approximately US$25.94 billion). The Guidelines have been released in a move to encourage more foreign issuers (i.e. sovereigns, international development institutions, financial institutions and non-financial enterprises established outside China) to participate in CIBM. This move is part of the efforts to internationalise China’s bond market and to align such market with the international bond market.The Guidelines have been highly anticipated by market participants as the Panda bond framework has, to date, been largely based on generic principles and practice without specific rules. In this alert, we provide a brief overview of the Guidelines, the key changes to existing principles and practice and the practical implications on Panda bond issuances going forward.