The Asian Development Bank (ADB) Monday launched its debut Renminbi-denominated or "Panda" bonds in the Chinese domestic capital market. ADB said in a statement that the issue has a principal amount of 1 billion Yuan (125 million US dollars), a bullet maturity of 10 years, and a fixed coupon rate payable annually.

"We are pleased to be able to launch this pioneering transaction soon after receiving the necessary approval from the People's Bank of China," said Mikio Kashiwagi, ADB's treasurer.

"ADB is privileged to be part of this important initiative. This is a major step forward in the development of Chinese capital market," he added. ADB said that it will use the proceeds of the bonds in China for funding private sector development projects through helping reduce the currency risks for private enterprises who have no foreign exchange earnings.

The issuance of Panda bonds will also have an important development impact on the Chinese bond market, which has been expanded significantly at an annual rate of 25 percent from the late 1990s to early 2005 when the country had a total of 600 billion dollars in bonds outstanding, it said. Another benefit is that the Panda bonds will have a strong signaling effect to the international community since they show the readiness of Chinese bond market infrastructure for participation by international institutions, it added.

After India and the Philippines, China is the third country where ADB plans to undertake local currency financing. The launch represents another milestone in ADB's quest to develop the region's bond markets.

With these landmark issues, ADB said that it will continue its role as a pioneer in regional bond markets, providing local and international investors with the highest quality debt securities supported by best practice issue standards and role model disclosure and documentation.

Source: Xinhua