Daimler Group and other Foreign Firms to Start Issuing Bonds in China
Daimler AG the German automaker will be the first foreign non financial company that will issue bonds in the domestic market in China. Several sources said that the issuance is considered as one of the important step in the country’s gradual campaign in reforming its financial system and to pave the way for other non Chinese firms to tap into the biggest collection of domestic savings in China.
Watchers is expecting that there will be a demand for the Daimler bonds just for the reason that the company has one of the strongest credit rating and is a known prestigious brand. This is part of a wider reform push wherein China promised to ease restrictions on the flow of investment bonds in and out of the country. Although Daimler will likely use its funds gathered from selling bonds from its Chinese operations, other foreign issuers will eventually be granted permission to move their own funds that is also raised on China to other locations.
Before only foreign entities were allowed to issue the so called panda bonds that were backed by state financial institutions namely Japan Bank for International Cooperation, Asian Development Bank and a private sector investment arm of the World Bank. Chinese and foreign firms also issued yuan denominated bonds also known as dim sum bonds in Hong Kong in the recent years but unlike domestic bonds, these so called dim sum bonds are not subjected to approval by Chinese regulators.