UBS sees broader RMB funding role

Tourists seen in front of a UBS bank in Switzerland. IMAGO

UBS's inaugural panda bond — the first issued by a Swiss financial institution — highlights the renminbi's growing role as a funding currency for international institutions and UBS's commitment to China, as financial opening-up and technology-driven growth create new opportunities, a senior executive said.

The Swiss banking group has priced the 2 billion yuan ($297 million), five-year bond at a coupon rate of 1.78 percent, the lowest on record for a five-year panda bond issued by a foreign financial institution, UBS said.

Panda bonds are yuan-denominated bonds issued in the Chinese mainland by overseas institutions.

Janice Hu, China country head of UBS and chairperson of UBS Securities, said China's bond market has become increasingly connected internationally, while its growing maturity and relevance have made it a natural funding market for international institutions.

"We see the onshore RMB market as an important component of UBS's diversified funding toolkit," Hu said in an exclusive interview with China Daily, adding that panda bonds and RMB financing can play an increasingly meaningful role as international institutions diversify their funding amid heightened global financial volatility.

China will further improve policy arrangements for panda bonds to facilitate more issuances and trading by overseas institutions, the People's Bank of China, the country's central bank, told China Daily earlier.

The bond issuance comes amid a broader expansion of UBS's presence in China. The group increased its stake in UBS Securities from 67 percent to full ownership in April 2025 and raised the unit's registered capital from 1.49 billion yuan to 2.21 billion yuan in December.

UBS Futures, meanwhile, raised its registered capital from 540 million yuan to 640 million yuan in February and then to 740 million yuan in April.

"These are not isolated capital deployments. They are part of one overarching vision — to build a stronger, more integrated and more competitive UBS platform in China for the long term," Hu said, adding that the additional capital supports investment in the group's platform, technology, talent and risk-management capabilities. China is one of UBS's most important strategic markets, where the group aims to reinforce its investment-banking position while expanding its wealth and asset management businesses.

A key opportunity for foreign financial institutions such as UBS is the listing wave among Chinese artificial intelligence and technology companies, Hu said, and such financing needs are gradually extending from IPOs to more sophisticated financing and cross-border mergers and acquisitions.

Since the start of 2025 until now, UBS Global Banking has helped clients complete about 80 transactions in the Chinese mainland and Hong Kong, raising more than $50 billion, according to the group.

Hu said participation by foreign investors in Chinese tech IPOs has been increasing, with active involvement from sovereign wealth funds, global long-only asset managers and specialist technology funds.

One reason for that interest is scarcity, she said, explaining that such listed Chinese companies offer foreign investors scarce exposure across the AI value chain, spanning large language models, robotics, data infrastructure, semiconductors and sensors, with a distinctive cost-performance advantage.

Hu also expressed a constructive medium-term view on Chinese equities despite recent volatility, as UBS's chief investment office continues to rate Chinese equities as "attractive", with net northbound flows from stock connects into A shares turning positive at $33 billion in the second quarter.

Further opening-up of China's futures market could also create more opportunities for UBS Futures, Hu said, particularly as international investors seek broader market access and more sophisticated risk-management tools.