LuxSE has reportedly become the first European exchange to list a Yulan bond. As explained in the announcement, the EUR 100 million Yulan bond issued by Orient Securities Company Limited was listed recently on the Luxembourg Stock Exchange on 16 October, making the exchange the “first” in Europe to list and admit this asset class to trading.
This past week, the Luxembourg Stock Exchange (LuxSE), Orient Securities Company Limited (DFZQ), Shanghai Clearing House (SHCH) and Euroclear Bank had officially confirmed the listing of DFZQ’s EUR 100 million Yulan bond on LuxSE’s Euro MTF.
Via the listing of this bond, LuxSE notably becomes the “first” European exchange to list and admit this unique asset class to trading.
As stated in the update, Yulan bonds are issued through the Shanghai Clearing House, and are especially “designed to link Chinese issuers with global investors.”
A Yulan bond is an offshore bond issued by a Chinese-based entity through SHCH and settled exclusively through Brussels-based Euroclear Bank.
Yulan bonds give Chinese domestic entities the opportunity to “access international capital markets” thanks to the cross-border cooperation between SHCH and Euroclear Bank “as domestic and foreign central securities depository infrastructures.”
The stated aim of these bonds is to effectively facilitate investment flows between investors and Chinese issuers, and thereby “expand financing options for Chinese companies.”
The structure derives its name from the yulan flower, which is the official flower of the city of Shanghai where this bond type was created.
The first Yulan bond was issued by Bank of China back in 2021.
The listing of DFZQ’ Yulan bond on LuxSE was made possible via a collaboration between LuxSE, SHCH and Euroclear Bank together with the issuer, which gives investors a new opportunity to trade the Chinese bond on LuxSE’s market, with “trade settlement to take place in Euroclear Bank’s environment.”
For 40+ years, LuxSE has been the European listing venue of “choice” for Chinese issuers wishing to tap into “international capital markets, and for international investors looking to channel capital into the capital market of China.”
Through the listing of DFZQ’s Yulan bond on LuxSE, the exchange cements its position as a key infrastructure in bridging the gap between Chinese and international capital markets and reaffirms its position of “contributing to the development of China’s bond market on the international stage.”
In April, LuxSE welcomed the first Panda bond to be listed on the exchange, “issued by the Asian Infrastructure Investment Bank.”
Panda bonds refer to a CNY-denominated bond issued by a non-Chinese entity in China’s onshore bond market and which is “available to both onshore and offshore investors.”
The exchange is now adding Yulan bonds to its “broad range of securities.”
