CRI听力:China's Panda Bonds Expected to Boom

A forum about the development of Panda Bonds and China's credit rating industry took place in Beijing, Monday.

Simon Choi, CEO of Dagong Hong Kong, a subsidiary of Dagong Global Credit Rating, said after the forum, that he believes more and more foreign entities will join the list of Panda Bonds issuers.

"I expect the Panda Bonds will grow substantially in 2016. As we expect the interest rates in China to fall further and RMB to become more increasing global, Panda Bonds become a good funding source for many foreign institutions. "

The first Panda Bond was issued in 2005, when the Chinese authorities allowed the World Bank's International Finance Corp. and the Asian Development Bank to sell 2.13 billion yuan financial bonds.

The issuance was widely seen as a major step towards opening up China's domestic bond market.

However, in the past decade, people did not see a crowded market for Panda Bonds and actually many of the issuers were Chinese state-owned entities such as China Development Bank.

Last year saw a turning point in the development of Panda Bonds - only days after Renminbi was added to the IMF's Special Drawing Rights basket, the South Korean government announced that it would issue 3 billion yuan worth of Panda Bonds, the first sovereign government to sell such bonds.

The International Finance Corp. predicted that the market will surpass 320 billion yuan in the next five years.

Kazuhiro Nomoto, The Japan Bank for International Cooperation's representative in China, adds that, in addition to Panda Bonds, China's bond market as whole has a lot of room to grow.

"Chinese economy now in term of GDP is twice as big as Japan's, but its bond market is still smaller than Tokyo. So there is big room for China to grow. And also if you look carefully at the bond market in China, most of the bonds are government-related, it is either (issued by) central bank, central government, provincial government, or so many from CDB, China Development Bank. Not many companies or commercial banks issue bonds domestically."

Nomoto notes that Panda Bonds, as a kind of international financial product, will benefit both international investors and domestic players.

"By inviting these foreign issuers, I think it is introducing Chinese investors to take more how to deal with this commercial risk to the bond market. I think that is a big step for Chinese investors. "

Simon Choi with Dagong Hong Kong also noted that Hong Kong's banking and financial institutions will be the first to benefit from the Panda Bonds. All three major banks in Hong Kong: HSBC, Standard Charted and Bank of China (Hong Kong) all successfully issued Panda Bonds last year.

For CRI, I am Qizhi.