Panda bonds can be placed among qualified investors or offered to the general public. In the latter case, one of the requirements for the issuer is a credit rating of AAA. However, in practice, a high credit rating is recommended for any type of placement due to investor preferences (98.8% of outstanding panda bonds have an AAA rating).
Why are panda bonds attractive to Russian companies?
For a number of Russian companies, currency financing through the issuance of panda bonds is extremely attractive due to the low interest rates on the Chinese debt market: the average rate on these bonds in the first quarter of 2025 was less than 2% per annum.
Can Russian companies issue panda bonds?
Between April and September 2025, a number of Russian companies, including Atomenergoprom JSC, Novatek PJSC, Zarubezhneft JSC, SIBUR Holding PJSC, Alfa-Bank JSC, Gazprom PJSC and Gazprom Neft PJSC, received the highest rating (AAA) from leading Chinese rating agencies. Combined with recent statements from the State Administration of Foreign Exchange of the PRC and the People's Bank of China, this indicates that Russian companies may once again gain access to financing in the Chinese debt market for the first time since the beginning of 2022.
What is the role of legal counsel in issuing panda bonds?
Currently, the requirements for issuing panda bonds and the regulatory approval process vary depending on the chosen market and method of placement. This further complicates the already complex process of issuing debt securities in China, a country with laws and business practices that differ significantly from those in Russia (not to mention the language barrier and cultural differences).
In these circumstances, choosing legal counsel is extremely important. Their task is to successfully guide the issuer through the entire panda bond issuance process, including legal due diligence and prospectus preparation, interaction and agreement of documents with financial advisors, rating agencies, auditors and other project participants, preparation and submission of documents to the regulator in Chinese, and, if necessary, support for the transfer of funds received from the issuance abroad, etc.
Why KKMP?
Our firm possesses unique capabilities to provide impeccable legal support to clients at all stages of issuing panda bonds.
KKMP has a dedicated China Desk operating directly in Moscow. The presence of qualified specialists in securities and investment funds within the department allows us not only to help overcome cultural differences but also to provide professional advice to clients on Chinese securities market regulations.
Our Capital Markets practice has extensive experience supporting international debt securities offerings by Russian issuers, including leading and complex transactions, many of which have been unprecedented in Russia.
Our tax practice also has significant experience in international debt securities offerings and can resolve any issues arising in connection with them, whether it’s writing the tax sections of the issuance prospectus, issuing a tax opinion, or clarifying complex tax issues to underwriters and regulators.
Finally, we maintain strong long-term partnerships with leading Chinese advisors. These are leaders in the field of panda bond issuance support, widely known for their proactive approach to client tasks. This alliance strengthens our Chinese expertise and adds invaluable experience working at the local level.