China allows more foreign banks to play lead role in debt underwriting

By Selena Li

HONG KONG (Reuters) – China has granted six foreign banks licences allowing them to act as lead underwriters for debt issues in China, as it admits more foreign players into the country’s fast growing renminbi-denominated onshore debt market.

Credit Agricole, HSBC and Standard Chartered obtained “type A” licences, allowing them to lead the underwriting of debt issues by domestic and foreign borrowers, a notice from the National Association of Financial Market Institutional Investors (NAFMII) showed on Thursday.

Previously, Deutsche Bank and BNP Paribas were the only two foreign banks to hold the licence.

Beijing also allowed JPMorgan, Mizuho and MUFG to become lead underwriters on debt issues by foreign borrowers, known as “Panda bonds”, according to the notice.

Foreign companies issued a record amount of local currency bonds in China in the first half of last year, the most recent data available shows, attracted by lower borrowing costs and government incentives aimed at promoting global use of the yuan.

NAFMII bonds refer to commercial paper and medium- and long-term bonds, widely used as sources of renminbi funding in China’s direct finance market, which are mainly issued by local public entities as well as a number of foreign governments and companies.

(Reporting by Selena Li; editing by Christina Fincher, Kirsten Donovan)