Sharjah Moves to Re-tap China Debt Markets with Panda Bond Plan

The Government of Sharjah, rated Ba1/BBB–/AAA by Moody’s, S&P and Lianhe respectively, has mandated several major banks to explore a new Panda Bond issuance in China’s onshore bond market. The Finance Department has appointed Bank of China as lead underwriter and bookrunner, with Crédit Agricole, JP Morgan Chase, ICBC, China Bohai Bank, Citic Securities, the Export-Import Bank of China, and Shenwan Hongyuan Securities acting as joint lead underwriters and bookrunners.

This initiative marks Sharjah’s second foray into the Panda Bond space; it first tapped the Chinese domestic bond market in February 2018 with a RMB 2 billion issue, becoming the Middle East’s first Panda issuer. That issuance carried a coupon rate of 5.8 per cent and matured in 2021.

Market participants say Sharjah’s renewed interest signals increasing appetite among Gulf issuers for renminbi funding, especially given the growing scale of China’s interbank bond market and its accessibility to international issuers. The Panda market is seen as a way to diversify funding sources away from traditional dollar or euro issuance, while deepening engagement with China’s capital markets.

Observers note that the list of joint bookrunners and underwriters—including both Chinese and Western entities—reflects a strategic bridging between global and Chinese investor bases. Bank of China’s role as lead suggests that Chinese financial institutions will play a key role in structuring and distributing the bonds to domestic accounts. The presence of Crédit Agricole and JP Morgan, meanwhile, may facilitate cross-border investor participation.

Industry sources expect the issuance to follow the standard procedure under China’s bond regulations governing overseas issuers. This includes registration with NAFMII, compliance with disclosure requirements, and pricing via roadshows to institutional investors in China. The timeline, tenor and final coupon structure have not yet been disclosed, but sources familiar with the matter suggest Sharjah is seeking favourable market conditions to launch.

Issuers of Panda Bonds have historically benefitted from lower yields relative to comparable offshore RMB options, thanks to the liquidity and depth of China’s domestic markets. That said, success depends heavily on investor confidence in the issuer’s credit profile, transparency in the bond documentation, and the relative attractiveness of coupon spreads over domestic benchmarks.

Sharjah’s credit ratings present both strengths and challenges. Its triple-A rating from Lianhe bolsters credibility in the Chinese market. However, its non-investment grade rating from Moody’s and S&P may weigh on perceptions among global investors. How Sharjah positions itself to bridge that gap will be critical, particularly in roadshow messaging and bond structuring.

This development arrives at a time when Panda bond issuance is gaining momentum. The Asian Infrastructure Investment Bank, for example, raised CNY 2 billion in its latest two-year Panda issuance, achieving oversubscription and attracting new investor accounts. The New Development Bank further expanded its onshore footprint earlier this year, issuing RMB 7 billion under its registered Panda Bond Programme.