(Yicai) Oct. 18 -- Egypt has issued the first-ever yuan-denominated panda bond in China’s interbank market by an African country, worth CNY3.5 billion (USD478.6 million).

Bank of China is the lead underwriter and bookkeeper of the panda bond, which has a term of three years and a nominal interest rate of 3.51 percent, the Beijing-based lender announced on Oct. 16. The proceeds of the bond will be used for climate-proofing agriculture, clean transportation, sustainable water, sanitation, government-subsidized housing, infrastructure, renewable energy, and biodiversity conservation, BOC added.

Panda bonds are yuan-denominated bonds issued by overseas institutions in the Chinese mainland market. Issuers include foreign government agencies, international multilateral development agencies, overseas financial institutions, and non-financial companies. All previous panda bonds were issued in Asia, Europe, and North America.

Egypt’s panda bond is also the first-ever sovereign panda bond with guarantors and the largest sovereign panda bond, BOC noted. Provided by African Development Bank and Asian Infrastructure Investment Bank, the bond’s guarantee is unconditional and irrevocable and covers the entire principal and interest.

The issuance of the panda bond demonstrates the cooperation between China and Egypt in sustainable development and their interconnections in the debt capital market, contributes to the co-building of China-Africa relations under the Belt and Road Initiative, and expands the use of the Chinese yuan in Egypt, BOC added.

The panda bond market has been growing significantly this year, as China further opens its capital market up and advances the yuan internationalization. Over CNY118.2 billion (USD16.2 billion) panda bonds were issued in the first three quarters of this year, versus CNY85.1 billion (USD11.7 billion) issued in the whole of last year.

Editors: Dou Shicong, Futura Costaglione