Beijing & Washington, DC, October 10, 2005—
The International Finance Corporation, the private sector arm of the World Bank Group, today launched a Panda Bond issue in the Chinese domestic market. The RMB 1.13 billion (approximately US$140 million equivalent) 10-year bonds were placed with institutional investors in the national interbank market. The bonds carry a 3.40 percent coupon rate and were issued at par. The joint lead managers are China International Capital Corporation and CITIC Securities.
The IFC issue marks the opening of the Chinese renminbi bond market to international financial institutions. This transaction provides a model for future high-grade issuers and helps deepen the overall capital markets.
"We are delighted to help open China’s domestic market with the Panda Bond,” said IFC Vice President and Treasurer Nina Shapiro. "IFC’s renminbi bond issue represents a small but important step for China’s capital markets. We hope that this bond will facilitate further expansion of the non-government bond markets in China and will increase access to capital for private companies. IFC greatly appreciates the efforts of the Ministry of Finance to spearhead this important Chinese Government initiative.”
IFC will use proceeds from the bond to finance three Chinese companies. IFC will provide RMB 406 million to Guangzhou Development Industry Holdings; RMB 65 million to Chindex International's United Family Hospitals; and RMB 650 million to Anhui Conch Cement Company.
“The bond provides IFC with a unique opportunity to support high quality domestic companies that need local currency financing,” said IFC Director for East Asia and the Pacific Javed Hamid. “This bond issue is an important part of IFC’s broader strategy aimed at developing the domestic financial sector and local capital markets in China,”
IFC funds its lending activities by issuing bonds in the international capital markets. The Corporation’s securities, which are rated Aaa by Moody’s and AAA by S&P, have been issued in 33 different currencies. IFC’s funding program for fiscal year 2006 is around $2 billion.
IFC has been the first, or among the first, nonresidents to issue in many currencies including Colombian pesos, Greek drachmae, Hong Kong dollars, Malaysian ringgit, Moroccan dirham, Singapore dollars and Spanish pesetas in the domestic markets; and in Czech koruna, Philippine pesos and Polish zloty in the eurobond markets.
Since 1985, IFC has invested more than $2 billion in 100 private sector companies in China.
The International Finance Corporation, the private sector arm of the World Bank Group, promotes sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Its 178 member countries provide its share capital and collectively determine its policies.
From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.
