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Glossary

Panda Bonds

Category — Bond Types
Panda Bonds are bonds issued by foreign issuers denominated in Chinese yuan renminbi (CNY) and placed on the domestic market of mainland China.

Characteristics:
• Bond issuers are registered outside China;
• The bonds are issued in the national currency of China;
• Panda Bonds are traded on the OTC market and exchanges;
• Bond issuers can issue Panda Bonds in both open and closed forms;
• On average, the term of circulation for Panda Bonds is from 1 to 10 years, the volume of issues is 1 to 4 billion yuan.

Advantages:
• Financing of operating expenses in yuan;
• High liquidity of the secondary market;
• Possibility to implement closed or open placement.

Disadvantages:
• Complicated procedure of issue.

Panda Bonds can be issued by both financial and non-financial companies (for example, BMW Finance, UC RUSAL), as well as by governments at various levels (for example, Hungary, British Columbia).

At the same time, issuers of Panda Bonds can be registered in Hong Kong and conduct their main business in China. Their issues in CNY in China will be called Panda Bonds in accordance with the country of registration.
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