Hungary entered Chinese onshore capital markets, at last, the EU country’s deal follows on from Poland, which last summer became the first non-Asian sovereign to issue a panda bond (Rmb3bn and priced at 3.4 per cent). Hungary raised Rmb1bn in a three-year panda bond.
Bank of China and HSBC are the joint lead underwriters for Hungary that have issued both offshore and onshore renminbi-denominated debt. The head of its debt management office noticed that in 2016, Hungary has already raised Rmb1bn in a dim sum bond, which was priced at a yield of 6.75 per cent.
As of July 25, the issue priced at a yield of 4.85 per cent, towards the lower end of the initial guidance of 4.6 to 5.2 per cent. It attracted orders of Rmb2bn ($300,000).
Panda bonds are renminbi-denominated debt sold onshore in China, as opposed to dim sum bonds which are offshore renminbi-denominated debt.
Hungary and other EU countries – renminbi debt history
Hungary is going to expand its investor base and take advantage of the significant volumes of capital seeking deals in the Chinese market. According to György Barcza of Government Debt Management Agency:
“We chose to issue in China because we wanted to foster the relationship between our two countries, and also because of the sheer size of the market,”
Mr Barcza said and added that Hungarian bonds could be used as an indication of the liquidity situation and demand in both Chinese and Hungarian markets.