Red lanterns hang from a ceiling in Quanzhou, Fujian, China

China has gradually opened its capital markets to foreign investors over recent years

Chinese regulators have granted HSBC a new bond licence, allowing the bank to offer corporate clients greater access to China’s capital markets.

The licence allows HSBC to act as a joint lead underwriter for ‘Panda bond’ issuances by offshore non-financial corporates. A Panda bond is a renminbi-denominated bond issued by a foreign entity in China’s domestic bond market.

HSBC is the first foreign bank to be granted a licence of this type.

We expect more foreign issuers from different industries to access the Panda bond market

The bank has previously been able to act as a joint lead underwriter for Panda bond issuances by foreign financial institutions and sovereigns. It has managed bonds for issuers including the Republic of Korea and Poland.

The new licence means that the bank can now offer the same service to non-financial companies – who may consider issuing a Panda bond if, for example, they are looking to do business with Chinese companies, expand their use of the Chinese currency or diversify their investor base.

HSBC Group Chief Executive Stuart Gulliver said: “HSBC has long supported the opening up of China’s financial sector, and we are proud of our pioneering role among foreign banks serving its fast-globalising bond market. We expect more foreign issuers from different industries to access the Panda bond market, drawn by its scale and the opportunity to engage with new investors.”

The granting of the licence supports HSBC’s ambition to develop its business in China. It follows the China Securities Regulatory Commission’s decision in June to approve HSBC Qianhai Securities, HSBC’s securities joint venture with Qianhai Financial Holdings. This is the first Chinese securities joint venture in which the foreign partner owns a majority stake.

The bank was also recently named Best Overall International Bank for the Belt and Road Initiative at the New Silk Road Finance Awards 2017, organised by Asiamoney magazine.

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