Chinese regulators have granted BNP Paribas a license to underwrite bond sales by foreign companies in China—so-called “panda bonds”—as Beijing steps up moves to open up the financial sector, the Financial Times reports.
BNP has become the third foreign bank after HSBC and Standard Chartered to receive a license to underwrite panda bonds, though no US group has yet received such an approval.
The panda bond market remains relatively small at the moment, with only $1.4 billion worth of bonds issued since the start of 2017. But analysts expect the mainland bonds to eventually replace so-called “dim sum bonds,” notes issued in Hong Kong’s offshore RMB market, as the main way that foreign firms sell RMB-denominated debt.
“With the growing maturity of multinational corporations’ operations onshore in China, foreign parent companies are increasingly seeking to tap the domestic bond market as an important and highly cost-effective source of renminbi funding to support their Chinese expansion needs,” said CG Lai, deputy head of BNP Paribas China, in a statement.