HONG KONG/SHANGHAI — An overseas unit of Shanghai Electric Group is set to sell Shanghai’s first offshore bond by a nonfinancial issuer in almost three years, said two people with direct knowledge of the deal, highlighting the city’s renewed push to become an offshore yuan hub.
Shanghai Electric Global Capital Ltd. aims to raise 1.5 billion yuan ($220 million) by selling yuan-denominated “Pearl Bonds” in Shanghai’s free trade zone (FTZ) on Wednesday, the people said.
The transaction is the first FTZ bond issued by a nonfinancial institution since authorities revived Shanghai’s offshore bond market in mid-2025, following a two-year lull.
Rules refreshed last year require that both FTZ bond issuers and investors be based offshore.
The market is a plank in China’s efforts to build Shanghai into an offshore yuan hub as it promotes global adoption of the Chinese currency, with debt among the main ways it aims to achieve that.
Shanghai Electric is selling three-year notes with initial price guidance of around 1.88 percent, according to one of the sources.
The proceeds will be used for general corporate purposes, working capital and refinancing, the source said.
The FTZ bond market was effectively shut down in 2023 as cash-strapped local government financial vehicles (LGFVs) rushed to the market, raising concerns among regulators.
As of Jan. 30, there were 110 outstanding FTZ bonds worth 75 billion yuan in total, most of them issued by LGFVs, according to Huatai Securities.
The scheme was revived in June 2025 after People’s Bank of China Governor Pan Gongsheng vowed to develop Shanghai’s FTZ bonds as part of China’s financial opening up.
China’s central bank has also authorized major state lenders to conduct offshore yuan transactions in the city’s free trade zone to increase liquidity.
FTZ bond issuers since the market’s resumption have so far all been financial institutions, including the Sydney branch of China Construction Bank and Guotai Junan Holdings.
