The National Association of Financial Market Institutional Investors (NAFMII), a self-regulatory body under the People’s Bank of China, announced the launch of the pilot programme late last week.
Panda bonds are renminbi-denominated bonds issued in the Chinese market by foreign issuers.
“As the sustainable development concept has been well-recognized in China, there are actual demands and practical foundations for the development of the green, social and sustainability (GSS) bond market,” said NAFMII.
“A large volume of bonds has been issued in China to promote sustainable development goals including low-carbon economic transformation, targeted poverty alleviation and ecological protection, and the market has witnessed sustained growth.”
While both social and sustainability bonds are issued by a borrower in China’s inter-bank market, proceeds of social bonds will be exclusively used for social projects, while that of sustainability bonds are exclusively applied to a combination of green and social projects, according to the association.
During the pilot phase, foreign governmental agencies, international development institutions, and overseas non-financial enterprises are eligible to register with NAFMII to issue social bonds and sustainability bonds.
Issuers may apply for registration specifically for social or sustainability bonds, or issue social or sustainability bonds under an existing registered bond programme after changing relevant terms and supplementing necessary information through the procedure of modification of terms.
Social bonds issuers should disclose information in accordance with relevant self-regulatory rules issued by NAFMII, and publish annually the use of proceeds and social projects supported or financed by such proceeds during the preceding year.