ICMA and NAFMII issue guidance on Chinese interbank bond market

The guide includes a manual on investing in CIBM, as well as a set of case studies to help foreign companies better understand panda bond issuance.

The ICMA (International Capital Market Association) and NAFMII (National Association of Financial Market Institutional Investors) have jointly published two publications intended to encourage the understanding and participation of international institutions in the Chinese interbank bond market (CIBM).

The first publication is a handbook providing advice to international investors on investing in CIBM, in light of the reforms aimed at opening up the market in recent years. CIBM represents 86 percent of the total size of the national bond market.

At the end of July 2021, 487 foreign investors had registered through the CIBM Direct program and 686 foreign investors through the Bond Connect program – two of the three channels that allow foreign investors to access the interbank market.

The third channel is the QFI (Qualified Foreign Investor) regime, which entered into force in November 2020 following the consolidation of two parallel regimes (QFII and RQFII) after the removal of their investment quotas.

The manual was developed to meet the demand from participants in domestic and international markets for an objective, comprehensive and accurate source of information on the Chinese bond market, NAFMII said.

The second publication presents case studies to help foreign companies better understand the opportunities to raise funds through CIBM through the issuance of panda bonds on the Chinese mainland.

By the end of August 2021, a total of 64 foreign issuers had issued CNY 370 billion of panda bonds on CIBM. Issuers included governments, international development institutions, financial institutions and non-financial corporations.

The case studies presented include issues from the World Bank, ADB (Asian Development Bank), Maybank, UOB, Crédit Agricole, as well as the three Japanese mega-banks Sumitomo Mitsui, MUFG and Mizuho, among others.

Earlier this month, CSRC (China Securities Regulatory Commission) vice chairman Fang Xinghai said China will further encourage and facilitate the issuance of panda bonds by foreign institutions.

Under current rules, foreign companies that issue panda bonds can use the proceeds in China or overseas.

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