United Overseas Bank Limited issues RMB5 billion panda bonds

This transaction comes at a time of increased interest in panda bonds, driven by favorable interest rate differentials and relaxed rules for offshore remittance of proceeds.

This significant transaction marks the largest issue size for a three-year tenor among foreign financial institution issuers.

The panda bonds, offered on a Reg S only basis, garnered strong demand with a subscription rate of 1.73 times from both onshore and offshore investors across Asia, and is the first panda bond to list on the Singapore Exchange.

Aloysius Tan, A&O Shearman partner, commented: “This transaction demonstrates the growing appeal of panda bonds among international issuers and highlights the strategic importance of the Chinese market for global financial institutions. The listing of the bonds on the Singapore Exchange also underpins the historic ties and collaborative efforts between China and Singapore and will foster further growth in the panda bond market.”

Agnes Tsang, A&O Sheaman partner, added: “The interest rate differential between China and the U.S. has created a favorable environment for entities to leverage panda bonds, making them a cost-effective funding option. The proceeds from this issuance can be fully remitted offshore and will play a crucial role in bolstering UOB's general banking business across Hong Kong and ASEAN, with a particular focus on supporting PRC-backed enterprises and facilitating trade and investment activities involving the PRC. By permitting greater cross-border flow of Renminbi, this further accelerates the internationalization of Renminbi and is a testament to the pivotal role that the capital markets play in driving economic growth and development.”

The A&O Shearman team was led by Aloysius Tan and Agnes Tsang, supported by Celine Sim and Sheryl Tan. A&O Shearman previously advised on UOB’s inaugural panda bond issuance in 2019.