The Arab Energy Fund has been granted regulatory authority to issue Panda bonds in China, and this is a big step toward the integration of the capital markets of the Middle East and China.
The move makes the Riyadh-based institution the first multilateral financial institution in the Middle East and North Africa region to obtain such approval, which gives it direct access to the domestic bond market in China.
The press release reported that the approval was permitted by the Asian country’s National Association of Financial Market Institutional Investors, the regulator when it comes to the interbank bond market.
However, this achievement is an indicator of the swiftly increasing associations between the Gulf Cooperation Council, particularly Saudi Arabia, and China.
High-level interactions have been focused on strategic investment and technology transfer in Vision 2030 areas in recent high-level engagements, which have led to dozens of deals, and in December, Foreign Minister Wang Yi termed the China-GCC partnership as critical in protecting shared interests and ensuring Global South resilience.
Under the program, TAEF has the power to issue up to 10 billion Chinese yuan ($1.4 billion) in Renminbi-denominated bonds. The fund will be able to issue these Panda bonds in various tranches within a span of two years, which will offer it the flexibility and easy long-term capital to invest in its strategy.
Chief Financial Officer of the Arab Energy Fund, Vicky Bhatia, said, “This milestone allows us to further diversify our funding sources by tapping into a deep pool of Chinese investors, while laying a strong foundation for closer collaboration between a highly rated multilateral financial institution from the MENA region and China’s capital markets.”
This access is one of the significant diversifications of the TAEF funding strategy. Panda bonds offer direct and consistent financing of the Renminbi, which enhances capital planning by the Fund as it funds projects throughout the energy spectrum.
Having a 50-year history and good governance with a high international credit rating, TAEF focuses on conventional energy, energy infrastructure, and wider energy transition solutions.
The increased participation in the onshore Panda market through entry into the onshore Panda bond market underlines its status as an effective, successful multilateral partner and an active, innovative capital market.
The shift demonstrates the rising role of China as a strategic contributor of capital to global energy projects and the growing financial connectivity between the MENA region and Asia.
