Kazakhstan's sovereign wealth fund (SWF) issued the first renminbi-denominated panda bond by a Central Asian entity in China's onshore market earlier this month, which experts said marks a crucial step in the region's integration into the global capital market.

The transaction saw the Samruk-Kazyna National Welfare Fund — Kazakhstan's largest state-owned asset management institution — issue 3 billion yuan ($440 million) in panda bonds within China's interbank market. The bonds feature a three-year maturity period and carry an annual coupon rate that has reached a record low of 2.18 percent.

According to a statement from the fund, this record-low yield reflects the high degree of confidence that Chinese institutional investors have placed in the institution.

By becoming the first major SWF in Central Asia to issue renminbi-denominated bonds in the Chinese onshore market, the fund has cast a significant vote of confidence for both Chinese bonds and the renminbi currency itself.

This financial move came at a critical time when global investors are actively seeking safe havens amid rising geopolitical uncertainties, including the conflict in the Middle East. As of the end of last year, the Samruk-Kazyna National Welfare Fund managed some $88 billion in assets.

The fund's press department emphasized that this transaction has successfully opened a direct channel for Kazakhstan to access one of the world's largest and most highly liquid bond markets. They described the move as a major breakthrough for the development of capital markets in both Kazakhstan and the broader Central Asian region.

A successful listing ceremony was held last Monday, bringing together senior executives from the Samruk-Kazyna National Welfare Fund, representatives from international financial institutions, and major trading partners. Key participants included the Bank of China, China International Capital Corp (CICC) and China Construction Bank.

Nurlan Zhakupov, head of the Samruk-Kazyna National Welfare Fund, said the bond issuance is a key step to diversify its financing channels and deepen its integration into the global financial market. "This is an important step in our integration into the global capital market — our first entry into China's domestic market," Zhakupov said.

He said the issuance demonstrates investors' high confidence in the fund and its financial resilience against risks. Moreover, he called it an important milestone that consolidates the permanent comprehensive strategic partnership announced by Kazakhstan and China in September 2019.

The lead underwriter, Bank of China, said the issuance was a major achievement of high-level, mutually beneficial cooperation between the two nations. "This is a good demonstration of deepening cooperation within the framework of the Belt and Road Initiative," it said in a statement.

Similarly, joint lead underwriter CICC said during a news release that the historic transaction will help promote the higher-standard opening-up of China's bond market. It also serves as a showcase for deepening capital market interconnectivity among countries participating in the BRI.

Renminbi financing has become increasingly attractive recently due to the interest rate differential between the renminbi and the greenback. Liang Huaxin, an analyst at CSPI Ratings, said in a recent report that this yield advantage, coupled with China's ongoing financial opening-up policies and the simplification of rules regarding cross-border renminbi usage, has significantly enhanced the overall appeal of the panda bond market.

renqi@chinadaily.com.cn