According to analysts, the participation of Brazil – a founding member of the Brics (Brazil, Russia, India, China and South Africa) bloc of emerging markets and the world’s 10th-largest economy – marked a milestone for China, which is leveraging the wide interest rate gap between the yuan and US dollar to increase the international allure of its currency.
A Brazilian panda bond issuance was the subject of speculation after the two nations convened a meeting in Shanghai on June 9, when Pan Gongsheng, the governor of China’s central bank, explicitly welcomed it as part of their broader financial cooperation.
The issuance is widely expected to happen this week in Shanghai’s interbank bond market, when Brazilian finance minister Dario Durigan will lead a delegation to visit China.
If launched, it would make Brazil the seventh sovereign issuer over the past year, following in the footsteps of the UAE, Pakistan and Kazakhstan and joining over a dozen nations across Asia, Europe and South America that have already taken part.