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Report: China to allow Japanese companies to issue panda bonds

Chinese and Japanese regulators are set to agree on a framework that will push forward a plan to allow Japanese companies to issue yuan-denominated bonds in China, The Nikkei reported Dec. 21, without citing a source.

Japan's Financial Services Agency and China's finance ministry will agree on Dec. 22 to create a framework on the exchange of auditing information. The move is seen as a major step toward allowing Japanese companies to issue the so-called panda bonds. The People's Bank of China will then have the final approval on the issuance of panda bonds by interested companies.

Bank of Tokyo-Mitsubishi UFJ Ltd. and Mizuho Bank Ltd. have already applied to Chinese authorities to issue panda bonds. The banks hope to issue the bonds as soon as they are granted approval.

The regulation will offer Japanese companies another avenue to raise funds in yuan. It will also be more cost-effective for Japanese companies to issue panda bonds in China rather than through their local units as they have higher credit ratings, the report said.