The European Union (EU) and China may not see eye-to-eye on a number of issues but when it comes to so-called Panda bonds and green bonds they do appear to be edging closer.
Despite testy negotiations, the two sides issued a joint statement on Tuesday when Chinese Prime Minister Li Keqiang visited Brussels.
At a press conference, European Council President Donald Tusk said, “Negotiations have been difficult, but ultimately fruitful.” Li, meanwhile, said China would provide fair and open access to EU investors, while calling on the EU to reciprocate.
Many Chinese offshore green bonds are already listed in Luxembourg, including Industrial Bank of China's €300 million ($338 million) debut international green bond and China Construction Bank's €500 million debut in November and September last year, respectively.
The Luxembourg stock exchange’s current position as the world’s leading trading exchange for green bonds is naturally attracting Chinese interest, Zhang said.
Other European exchanges are wooing Chinese green bonds too, not least London, which drew Industrial and Commercial Bank of China's blockbuster $1.58 billion-equivalent green bond last June.
Younger, more-specialised exchanges are also upping their game.
“Yes, we plan to follow the Chinese opening-up strategy and welcome more bonds from Chinese issuers. Especially the green bonds are a big topic with European investors,” a spokesman for the Frankfurt-based China Europe International Exchange (CEINEX) told FinanceAsia.
CEINEX is a joint venture between the Shanghai Stock Exchange, Deutsche Börse Group and China Financial Futures Exchange for trading China-related securities outside China.
That includes Panda bonds, which are renminbi-denominated bonds issued by non-Chinese entities in China.
“We can also feel rising interest from German and European companies to issue Panda bonds and are supporting them to do so,” the CEINEX spokesman added.
In March, two German carmakers, Daimler and BMW, issued Panda bonds.
On March 23, an Italian state-owned bank, Cassa Depositi e Prestiti (CDP), announced that it and Bank of China, one of the Big Four Chinese state-owned banks, had signed an agreement to support Italian firms in China. This agreement includes plans for the issuance of Panda Bonds.
The announcement coincided with Chinese President Xi Jinping’s visit to Italy from March 22 to 24, where he received a red-carpet welcome.
Ireland is also trying to get in on the act. Daryl Byrne, chief executive officer of Euronext Dublin, told FinanceAsia, “With China being the third-largest bond market in the world, we certainly intend to increase more ties with China on bonds.”
Euronext Dublin recently hired a Mandarin and Cantonese speaker to help boost its bond business from China and Hong Kong, Byrne disclosed.
Euronext is a pan-European stock exchange operator with a presence in Paris, Amsterdam, Dublin, Brussels and Lisbon. Its exchanges currently hosts three Chinese green bond issues totalling €2.3 billion from China Three Gorges, China General Nuclear Power Corporation, and Bank of China.
In late March, the Central Bank of Ireland approved Irish investment funds called Undertakings for Collective Investments in Transferable Securities (UCITS) and Alternative Investment Funds to trade Chinese bonds via Bond Connect, a Hong Kong platform which connects international investors with China’s bond market.
The EU “pursues a realistic and multi-faceted approach” to China, a European Commission press release stated on Tuesday. A European Commission report on March 12 described China as both “a cooperation partner” and “a systemic rival promoting alternative models of governance”.
