Panda Bonds 熊猫债券: $656 million of your tax dollars at risk

On January 25, 2016 the Province of  British Columbia raised ¥300,000,000 (equivalent to CAD $656.4M) through the issuance of a three year, 2.95% annual pay fixed income instrument known as a "Panda Bond".

Using the initial capital raised (¥300,000,000), the Province deposited the proceeds (net of investment banking fees and other costs) at the United Overseas Bank (UOB), a multinational banking organization headquartered in Singapore. For their deposit, the Province earns 3.93% annually...but at what risk?

The Province has unncessarily exposed taxpayer dollars to foreign geopolitical and economic risk. Had the Province chosen to keep the capital in Canada and invest it in a domestic, lower risk institution, not only would the return be higher, but the extra risks associated with investing in foreign firms would be eliminated.

The Province’s choice to invest Canadian taxpayer money overseas in an Asian bank also leads to question the Province’s ulterior motives which could be further explored. 

In my report, I explore the risks, costs and other problems associated with a deposit with the UOB as well as the domestic alternative that the province could have explored.

Read the full report and investigation here.