Morgan Stanley has become the first American company to tap China’s panda bond market, with a 2 billion yuan ($279 million) deal.
Unit Morgan Stanley BV priced five-year notes at 1.98% on Thursday, people familiar with the matter said, asking not to be identified discussing private matters. That’s about five basis points higher than the average yield of similar yuan-denominated corporate notes. The offering is the first panda bond issued by a US firm, according to Bloomberg-compiled data.
Proceeds from the sale will be remitted out of China to be used offshore for general corporate purposes by subsidiaries to support activities potentially including the group’s offshore yuan business, the people said.
Wall Street banks have been recalibrating their China strategies in recent years as they struggle to navigate US-China relations, while maintaining sound operations onshore amid a sluggish economy. Despite optimism about China’s long-term potential, many banks have scaled back investments, cut jobs and shifted focus to other markets, including India and Japan.
The issuance comes four months after the bank held a roadshow in Beijing with Chinese lenders. It’s unclear whether the sale was delayed by recent Sino-US trade tensions.
China’s credit markets have emerged as an unexpected haven from the trade war turmoil as funding costs in yuan slid amid bets that authorities will keep liquidity ample enough to help counter the impact of tariffs. The boom has also been fueled by wariness among global investors toward US debt and the dollar, as uncertainty grows over the country’s policy making.
A Morgan Stanley spokesperson confirmed the panda bond issuance.
Sales of panda bonds, local securities issued by foreign borrowers, jumped to 52 billion yuan as of late July, the most for similar periods since Bloomberg started tracking the data in 2005.
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