German automaker Daimler will become the first foreign, non-financial company to issue bonds in China's domestic market, two sources close to the deal told Reuters on Wednesday.
The deal marks an important step in China's gradual campaign to reform its financial system and could pave the way for other non-Chinese firms to tap the world's third-largest bond market behind the United States and Japan.
For the Stuttgart-based automaker it is a breakthrough in its efforts to mitigate currency risk and diversify its sources of funding to reduce dependence on bank loans.
Daimler is currently investing to overhaul its factories in China, the world's second-largest economy, to equip them for production of the new Mercedes' C-class sedan for Chinese customers.
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Daimler can now sell the so-called panda bonds in local financial markets, adding fixed income as a source of funding to the bank loans currently used as the main way to refinance a large part of its Chinese business.
