Beijing is reportedly preparing to reopen its domestic bond market to major companies including Rosatom and Gazprom

Major Russian companies, including nuclear giant Rosatom and gas major Gazprom, are considering issuing yuan-denominated 'panda bonds', according to media reports.

Since the escalation of the Ukraine conflict in 2022, Russian companies have been barred from Western capital markets under sweeping sanctions, pushing them to seek financing alternatives in Asia. Now China is preparing to reopen its domestic bond market to major Russian energy companies, the Financial Times reported on Monday.

Chinese regulators reportedly told executives at a meeting in Guangzhou in August that they would back their plans to issue panda bonds, yuan-denominated debt sold by foreign issuers in China.

Russian issuers are interested in placing bonds on the Chinese market, and the matter is being discussed with their Chinese counterparts, Deputy Finance Minister Ivan Chebeskov told reporters on Monday.

"We are discussing how best to do this; talks with our partners are ongoing," he said.

The move would mark the first Russian corporate fundraising in mainland China since 2022, and the first sale of Russian debt on China's onshore public market since aluminum producer Rusal raised 1.5 billion yuan ($210 million) through a panda bond in 2017.

The revival of Russian panda bonds is expected to start with a handful of issuers. Potential first borrowers reportedly include Rosatom and its subsidiaries, which have not been hit by sanctions.

Any Russian bond sales would still need clearance from Chinese regulators, while investors in potential yuan issues would have to weigh the risk of secondary sanctions.

"For China, the risk of secondary sanctions has made banks cautious about deals that could be viewed as breaching or undermining sanctions," Danske Bank analyst Allan von Mehren told Reuters.

On Friday, Chinese rating agency CSCI Pengyuan gave Gazprom its top AAA rating, clearing the path for potential debt issuance in China's domestic bond market.

The development comes as Presidents Xi Jinping and Vladimir Putin strengthen their 'no limits' partnership. During his visit to China last week, Putin called for a joint financial infrastructure for Global South countries and proposed that members of the Shanghai Cooperation Organization issue joint bonds.

(RT.com)