The bank’s top management team is going to be in Beijing on March 19 and has invited big Chinese banks for a soft marketing of the deal, several sources close to the deal have told GlobalRMB.
Before coming to China’s domestic Panda bond market, Gazprombank was considering a return to the dim sum market, but is now testing out the Panda route after a tepid market response, according to two of the sources.
Panda bonds are renminbi-denominated bonds issued by foreign entities in China’s onshore bond market.
“The bank may want the big Chinese banks to buy and arrange the potential transaction for them, but I don’t think it will be that easy to pull it off,” said a banker at one of the big four Chinese banks. “Given the current US sanctions against Russia there will be political risks for the banks’ overseas business.”
Another hurdle is presented by the current guidelines on Panda bond issuance from the People’s Bank of China (PBoC). Only SSAs and corporates can apply to issue Panda bonds.
“It will need a special approval from the PBoC, or wait for the regulator to revise the rules for Panda bonds,” commented another banker. “It will be innovative, but I assume it will take some time to fulfill it.”
Gazprombank declined to comment when contacted by GlobalRMB.
There have been three true Panda bond issuers. Asia Development Bank and IFC each sold one in 2005, before re-visiting the market in 2006 and 2009, respectively. Daimler made the third issuer by an offering in March, 2014 and was the first corporate to do so.
The term, however, has sometimes been loosely used to refer to issuance by the China subsidiaries of foreign companies — Bank of East Asia, Mizuho and DBS have all done such deals before.
Gazprombank last tapped the dim sum bond market a little over a year ago, pricing a three-year 4.25% Rmb1bn bond on January 23 2014. Bookrunners were BOC International (BOCI), Gazprombank subsidiary GPB Financial Services, and HSBC.
The dim sum deal was the second for the bank, which debuted in the CNH bond market in February 2013, when it raised Rmb500 (£79.86m) with another three-year issue priced to yield 4%. BNP Paribas, BOCI and Gazprombank were on the syndicate at the time.
The Central Bank of Russia has an active currency swap line with People’s Bank of China for Rmb150bn ($23.96bn) valid for three years, following an agreement reached in October 2014. There is also an agreement from November 2010 for the direct trading of the RMB and Russian rouble.
In an October 15 press release, the Moscow Exchange stated that CNY/RUB turnover had grown tenfold year-on-year in the first nine months of 2014, reaching Rmb7bn ($1.12bn) in September.