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Hungary to issue US$291 million Panda bonds

Hungary will issue $291 million worth of yuan-denominated “Panda bonds” next week, conservative print and online media Magyar Idők reports.

editor: REMIX NEWS
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Magyar Idők quoted Bank of China official in charge of European monetary institutions Chu Furong as saying that the issue will be on the Chinese financial market next Monday. This is the second so-called “panda bond” issued by Hungary.

A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in the People’s Republic of China.

Hungary – in a drive to diversify its decreasing exposure to foreign financial markets – has become more active in Asia, particularly in the Chinese market. It has also issued a so-called “dim sum bonds”. Dim sum bond is a bond denominated in Chinese renminbi and issued in Hong Kong. Dim sum bonds are attractive to foreign investors who desire exposure to renminbi-denominated assets, but are restricted by China’s capital controls from investing in domestic Chinese debt.

With next week’s issue, Hungary will have exhausted its three billion yuan limit for panda bonds. Chinese authorities control the amount of yuan bonds any foreign country can issue and Hungary was the first Central European country to be allowed such an issue.

This spring Hungary has also issued “samurai bonds” (yen-denominated bonds on the Japanese market) to the value of 30 billion yen (US$264 mln), for the first time in ten years. While the total value of Asian bonds within the country’s debt is relatively small, the Hungarian Central Bank is continuing its exploration of the Asian bond markets in search for both diversification and better financial conditions.