One Belt, One Road Spurs Growth in Yuan Denominated Bonds


The Chinese government’s efforts to step up financing of its One Belt One Road Initiative has seen 170bn yuan (USD$24.63bn) in debt-related instruments issued for related projects thus far.

Observers note that the large volume of infrastructure development and industry collaboration that the initiative entails will in turn require an immense volume of financial support over the long-term.

Bonds are an outstanding means of satisfying the demand for financing that One Belt One Road will generate, given their low cost and comparative high transparency and liquidity.

Chinese financial players expand Silk Road bond issuance

On 11 May the China Banking Association held a press conference in conjunction with the China Development Bank, the Import Export Bank, the Industrial and Commercial Bank of China and Bank of China on the current state of financial support for China’s flagship One Belt One Road Initiative.

Press conference participants revealed that members of China’s National Association of Financial Market Institutional Investors had issued bonds worth 234.970 billion yuan to projects in the core support areas of Fujian province and Xinjiang in China’s far west.

Of this amount 143.4 billion yuan has been allocated to support key projects associated with the One Belt One Road initiative.

One Belt One Road to spur further growth in panda bonds

In addition to driving expansion in domestic bond issuance, One Belt One Road is also seen as vital prop for the growth of panda bond issuance by China’s key trading partners.

In February Russian aluminium giant Rusal became the first One Belt One Road-related corporation to issue panda bonds within China, following the successful registration of 10 billion yuan in these debt instruments.

Earlier this month the Shanghai Stock Exchange said that it was providing ongoing support to Rusal in relation to its debt issuance, and that in future it would continue to support the release of corporate panda bonds as part of efforts to better service the One Belt one Road initiative.

Figures from the National Association of Financial Market Institutional Investors indicate that as of the end of April a total of 25 overseas issuers had registered 237.1 billion in panda bonds, successfully issuing 63.1 billion.

According to 21st Century Herald overseas issuers involved in the One Belt One Road initiative had registered 69 billion yuan in panda bonds on the interbank market, and issued a total of 26.5 billion.

One Belt One Road projects thus account for over a fourth of panda bond registrations, and nearly one half of actual issuance.