Egypt issues MENA-first sustainable panda bonds worth $500m

Key Takeaways

A panda bond is a bond denominated in renminbi (RMB) and issued in mainland China by a foreign entity, which can include national governments, local governments, multilateral development banks, regional development banks, or non-financial institutions. A green panda bond follows the same issuance framework but is distinguished by the "green" label. The proceeds from green panda bonds are specifically designated for financing environmentally friendly assets and projects. Issuers of green panda bonds are required to monitor and report on the utilization of funds to ensure compliance with China's green taxonomy and related regulations. It is often more suitable for regional and continental development banks, such as the African Development Bank (AfDB), the African Export-Import Bank, the Eastern and Southern African Trade and Development Bank, and the West African Development Bank, to issue panda bonds rather than African countries. This is because these development banks typically possess stronger credit ratings compared to some African countries that experienced significant sovereign credit rating downgrades recently. That adds more significance to Egypt's successful issuance. Leveraging green panda bonds can help African governments finance green and environmentally sustainable projects effectively.