Silk Road paves the way to the Chinese bond market

March 31, 2015

Partner Marat Davletbaev, head of NSP’s global practice, comments on action plan for a key project in the sphere of Russian-Chinese economic cooperation.

Late last week the Chinese government published a document entitled “Outlook and Action Plan in Furtherance of Joint Construction of the Economic Belt of the Silk Road and Marine Silk Road of the 21st Century” (the “Action Plan”).

The Action Plan contains many different proposals, including “to support governments of the countries situated along the route [the Economic Belt of the Silk Road and Marine Silk Road of the 21st Century] and their companies and financial institutions with a relatively high credit rating in issuance of CNY-denominated bonds in China”.

This document paves the way for foreign financial institutions and companies to issue so-called ‘Panda bonds’ in China, provided that the entities have been incorporated in countries situated along the route of the Economic Belt of the Silk Road and the Marine Silk Road of the 21st Century and have relatively high credit rating. According to Marat Davletbaev, even though the Chinese government and the respective ministries and departments (including the People’s Bank of China) have yet to elaborate detailed plans, this is good news for Russian companies and banks, as it offers them an opportunity to join the Panda bonds market.

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