Fangda has recently represented a number of international issuers on their issuances of RMB-denominated bonds (“Panda Bonds”) on the Chinese onshore market, including multiple firsts on the market. These transactions are expected to further diversify the Panda Bond market.

Christine CHEN | Helen ZHAO | YOU Siyu

First Panda Bond from South America and the First Green Bond from the Pulp and Paper Sector under the 2021 Green Bond Catalogue

Fangda advised Suzano S.A. (“Suzano”), the world’s largest market pulp producer from Brazil, on its debut Panda Bond offering in November 2024. Suzano successfully issued the RMB 1.2 billion, three-year green Panda Bond on the China Interbank Bond Market. The proceeds will be used offshore to fund the development and operation of eucalyptus forests plantation for commercial uses, including eucalyptus planting, land preparation and forest maintenance.

This Panda Bond issuance coincides with the 50th anniversary of the establishment of diplomatic relations between China and Brazil, marking the first Panda Bond issuance by a South American company. It is also the first green bond offering by a company in the pulp and paper sector on China’s bond market under the 2021 Green Bond Endorsed Projects Catalogue. The use of proceeds for the Bonds is in line with multiple green bond standards, including the PBOC and CSRC Guidelines for Green Bond Evaluation and Certification(for Interim Implementation), the NAFMII Guidelines for Green Debt Financing Instruments for Non-financial Enterprises, the Green Bond Endorsed Projects Catalogue (2021 Edition), the Guidance Catalogue of Green and Low-carbon Transformation Industries (2024 Edition), the Green Bond Principles (June 2021), the United Nations 2030 Agenda for Sustainable Development, and the China Green Bond Principles.

Headquartered in Brazil and with 100 years of experience, Suzano is the first global industrial-scale producer of eucalyptus pulp, as well as the world’s largest producer of market pulp. Its shares are traded on the special listing segment of the Brazilian stock exchange, Brasil, Bolsa, Balcão (Novo Mercado segment), and its American deposit shares are traded on the New York Stock Exchange.

Fangda, as Suzano’s PRC legal advisor and the lead counsel for the transaction, played a key role in the registration of Suzano’s panda bond issuance program and the issuance of the Bonds. Fangda provided Suzano with comprehensive legal services, including, among others, advising on the deal structure and execution, as well as drafting disclosure and transaction documents.

First Financial Panda Bond Listed on the Singapore Exchange

Fangda advised United Overseas Bank Limited (“UOB”) on its offering of RMB 5 billion, three-year Panda Bond on China’s Interbank Bond Market in October 2024. This transaction set a new record for the largest issuance of three-year Panda Bonds by foreign financial institutions and the largest Panda Bond issuance by Southeast Asian issuers. The bonds are also the first Panda Bond listed on the Singapore Exchange.

UOB is a leading bank in Asia. Operating through its head office in Singapore and banking subsidiaries in China, Indonesia, Malaysia, Thailand and Vietnam, UOB has a global network of around 500 branches and offices in 19 countries and territories in Asia Pacific, Europe and North America.

Fangda acted as UOB’s PRC legal counsel and provided comprehensive PRC legal services to the issuer, including drafting most of the transaction and disclosure documents for the offering.

First Corporate Panda Bond Listed on the Singapore Exchange and the First Panda Bond Offering Utilizing the “First Come, First Serve” Pricing and Allocation Mechanism

Fangda advised BASF SE (“BASF”) on its debut Panda Bond offering in June 2024. The RMB 2 billion, three-year Panda Bond was offered on China’s Interbank Bond Market and listed on the Singapore Exchange, marking the first corporate Panda Bond of non-financial institution issuer listed on the Singapore Exchange. Additionally, certain innovative pricing and allocation mechanisms were introduced to this transaction under the pilot regime launched by the National Association of Financial Market Institutional Investors, including the flexible allocation for margin orders, “first come, first serve” allocation principle and subscription order transparency. These innovative pricing and allocation mechanisms are expected to facilitate market-driven pricing of Panda Bonds and the transparency in pricing.

BASF is a leading manufacturer of chemical products from Germany. Its portfolio comprises six segments, including Chemicals, Materials, Industrial Solutions, Surface Technology, Nutrition & Care and Agricultural Solutions. BASF shares are traded on the stock exchange in Frankfurt (BAS) and as American Depositary Receipts (BASFY) in the U.S.

Fangda, acting as BASF’s PRC legal advisor and the lead counsel for the transaction, played a key role in the registration of BASF’s Panda Bond issuance program and the debut issuance thereunder. Fangda provided BASF with comprehensive legal services, including, among others, advising on the deal structure and execution, drafting the disclosure and transaction documents, and assisting BASF on the determination of the pricing and allocation mechanisms. In addition, Fangda also acted as BASF’s listing agent for listing the bonds on the Singapore Exchange and secured the listing approval after extensive communications with the Singapore Exchange.

The First Multi-tranche Financial Panda Bond

Fangda advised Crédit Agricole S.A. (“Crédit Agricole”) on its issuance of RMB 4.5 billion dual-tranche Panda Bonds in July 2024: Tranche 1 with a three-year tenor and a principal amount of RMB 3.5 billion, and Tranche 2 with a five-year tenor and a principal amount of RMB 1 billion. This transaction marks the first dual- tranche Panda Bond issued by a financial institution and the largest Panda Bond issuance by a global systemically important bank or a European bank as of the date of issuance.

Crédit Agricole offered its first Panda Bond in 2019, being the first global systemically important bank from Europe to tap the Panda Bond market. Crédit Agricole has issued Panda Bonds in an aggregate principal amount of RMB 13 billion, having contributed to the opening up and diversification of China’s bond market.

Fangda has represented Crédit Agricole on all of its Panda Bond offerings since 2019. In this transaction, Fangda acted as the PRC legal counsel to the issuer and lead counsel for the transaction, and provided comprehensive PRC legal services to the issuer, including drafting all transaction and disclosure documents and actively participating in the deal execution process.

First “Dual Upgrade” Themed Panda Bond

Fangda advised Zhongsheng Group Holdings Limited (“Zhongsheng”), a leading national automobile dealership group in China, on its issuance of RMB 1.5 billion, three-year Panda Bond in August 2024. The proceeds will be used for projects in the “Dual Upgrade” area (i.e. upgrade of large-scale equipment and consumer goods), including the purchase of used cars. This offering responds to the Chinese government’s focus on the four action areas of “equipment upgrading, consumer goods replacement, recycling and standard raising”, and is the first Panda Bond to be issued under the “Dual Upgrade” theme. Part of the proceeds will be used to fund the development of Zhongsheng’s used car dealing business.

Zhongsheng is one of the leading automobile dealership groups in China, with a large number of 4S dealership stores across 25 provinces and regions and 110 cities. Fangda, as Zhongsheng’s PRC legal counsel for the transaction, provided comprehensive PRC legal services for the registration Zhongsheng’s Panda Bond program and its debut issuance thereunder.

Other Panda Bond Issuances

Fangda’s cross-border debt capital markets team has completed 15 Panda Bond transactions this year, maintaining a leading position on the Panda Bond market. In almost all of these transactions, Fangda acted as the issuer’s PRC legal counsel and lead transaction counsel.

Additional Panda Bond offerings Fangda advised on in 2024 include:

• Two sustainable Panda Bond offerings by Asian Infrastructure Investment Bank with an aggregate principal amount of RMB 6 billion;
• Two Panda Bond offerings by Deutsche Bank with an aggregate principal amount of RMB 6 billion;
• Offering by BMW Group of its RMB 2 billion commercial paper, RMB 3.5 billion dual-tranche medium-term notes and RMB 1.5 billion three-year medium-term notes;
• Offering by Volkswagen Group of its RMB 1.5 billion medium-term notes;
• Offering by CSSC (Hong Kong) Shipping of its RMB 800 million medium-term notes.