B.C. to re-enter ‘Panda bond’ market

The Panda bond is issued in China using the RMB | Shutterstock

The B.C. provincial government – among the first foreign governments to issue bonds directly into China’s domestic market using the Chinese currency renminbi (RMB) in 2016 – will again dip into the “Panda bond” market.

The province said November 17 it will issue a three-year bond for 1 billion RMB, or roughly $192.5 million, in the Chinese market. The final coupon for the bond issue will bet set November 22, officials said.

The “Panda bond,” issued in China using the RMB, allows Chinese investors to buy bonds without having to exchange currencies into units such as the Canadian dollar, vastly widening the number of investors who can make the purchase.

When the province, then under a Liberals-led government, issued 3 billion RMB in Panda bonds in January 2016, it was the first non-Chinese governmental body approved by Beijing regulators to issue bonds in China (and the second – after South Korea – to actually issue bonds).

The approval, which came in December 2015, allowed for B.C. to issue up to 6 billion RMB in bonds – with each issuance no greater than 3 billion in value – until December 3, 2017. With the provincial announcement under the NDP government, the total issuance amounts to 4 billion RMB, leaving 2 billion in spare capacity unused.

The Liberals, under then-finance minister Mike de Jong, had expressed the desire to fully maximize the 6 billion RMB allotment in 2016 after the first 3 billion RMB issuance. However, a provincial spokeswoman under current Finance Minister Carole James said no decisions have been made on using the last 2-billion-RMB in bond capacity before December 3.

Officials said they felt the current market conditions best support an issue of 1 billion RMB in Panda bonds, and James said in a statement that the announcement shows the NDP government’s dedication to strengthen B.C.’s international trade and financial profile, in order to bring jobs to the province.

The Bank of China and HSBC, which jointly managed B.C.’s last Panda bond in 2016, will again manage the new round of bonds, officials confirmed.