HSBC’s 4.5 Billion Yuan Panda Bond on US Dollar Tariff and Internationalisation of the Yuan

US Dollar Tariff and Yuan Internationalisation

HSBC has issued a 4.5 billion yuan (US$623 million) panda bond to enhance the internationalisation of the yuan, primarily benefiting Hong Kong as a global offshore yuan centre. Following an increase from a base size of 3 billion yuan, the bond offering was oversubscribed by 1.88 times, indicating strong demand. This issuance is part of HSBC's broader 10 billion yuan bond-sale programme approved by China's central bank, set to unfold until October 2026.

Significance of the Panda Bond Market

The panda bonds, yuan-denominated securities issued by offshore companies, have seen a surge in activity due to relaxed regulations and favorable currency funding costs compared to the US dollar. In 2024 alone, 178 billion yuan has been raised through 100 panda bonds, showcasing the growing trend among foreign companies favoring yuan financing.

Commitment to RMB Business Growth

As stated by David Liao, HSBC's co-CEO for Asia-Pacific, this issuance reflects the bank's commitment to support global demands for the yuan, enhancing Hong Kong’s status. In tandem, the Hong Kong Monetary Authority is collaborating to boost the liquidity pool needed for meeting increasing client needs in yuan funding.