According to the British newspaper, Chinese financial market regulators indicated in a meeting with Russian executives, held in Guangzhou at the end of August, that they would support the issuance of bonds denominated in the Chinese currency (“panda bonds”) by large Russian energy groups.
This initiative would represent the first fundraising by Russian companies in China’s public markets since the invasion of Ukraine in 2022, and the first operation of its kind since Russian aluminum producer Rusal issued 1.5 billion yuan in “panda bonds” in 2017.
The project could initially involve two or three groups, including state-owned Rosatom and its affiliates, which are not covered by comprehensive Western sanctions, according to sources cited by the FT.
Gazprom, also involved, obtained last week a top “AAA” credit rating from Chinese agency CSCI Pengyuan, a necessary step to access the market.
The move comes at a time when China and Russia are strengthening their strategic cooperation. Last week, Chinese President Xi Jinping and Russian President Vladimir Putin met in Beijing and announced an agreement to build the Power of Siberia 2 gas pipeline, a project that could redefine global energy flows.
Until now, most major Chinese banks had avoided financing Russian companies, fearing secondary sanctions from the United States. However, the growing importance of the yuan as an international currency and Beijing’s close ties with Moscow are leading to a reassessment of those restrictions.
Sources cited by the Financial Times nevertheless warned that legal risks remain: Chinese banks that underwrite these bond issuances are still subject to potential U.S. Treasury sanctions, especially if the issuers are under direct sanctions.
In addition to Gazprom and Rosatom, other Russian energy companies, such as Novatek and Zarubezhneft, have already obtained credit ratings in China, according to the FT.
When contacted by the newspaper, institutions such as the People’s Bank of China, the China Securities Regulatory Commission, and the National Association of Financial Market Institutional Investors did not comment.
The initiative comes at a time when Russia’s access to Western financial markets is heavily restricted, and it may represent another step in Moscow’s attempt to diversify funding sources and reduce dependence on the dollar, the FT noted.
