Deutsche Bank announced on Wednesday that it has issued its inaugural panda bond, raising 1 billion yuan ($147.62 million), via three-year senior preferred notes.

This transaction enables the bank to directly tap into China's onshore bond market, accessing a new investor base at attractive funding levels.

The proceeds of the transaction will be used for general group funding purposes. The deal marks the first panda bond following recent regulatory changes by the People's Bank of China, the central bank, and the State Administration of Foreign Exchange to facilitate foreign remittance of panda bond proceeds.

"China's onshore bond market is the second largest in the world. Increased international investors and issuer activity is an important step in China's capital market opening and global financial system integration. Deutsche Bank is proud to play a driving role in broadening international participation in this important market," said Alexander von zur Muehlen, Deutsche Bank Asia Pacific chief executive officer and a member of the management board.

"Deutsche Bank's panda bond issuance has demonstrated the value of accessing the onshore market for international issuers. China has continued to improve its regulatory framework for panda bonds, and the market is a key focus for our franchise," said Rose Zhu, Deutsche Bank China chief country officer.

China said on May 27 it would further facilitate foreign institutional investments in its bond market and coordinate the opening-up of the interbank and exchange bond markets.

Its financial authorities released regulations in November to optimize fund management requirements for foreign institutional investors in the country's bond market. This will help increase the panda bond market attractiveness to investors.

Last year, 20 entities issued 52 panda bonds and raised a total of 85.07 billion yuan, said a report released by China Lianhe Credit Rating Co.

This year, China's central bank will implement a prudent monetary policy that is targeted and forceful to support the economy. Financing costs of panda bonds are likely to remain at a relatively low level, which will enhance the attractiveness of the panda bond market to issuers, said Wang Yifan, an analyst at China Lianhe Credit Rating.

The gradual recovery of the Chinese economy will bolster the trend of the renminbi exchange rate. In addition, China will keep enriching the types of financial derivatives and reduce panda bond issuers' exposure to foreign exchange risks. The country has also launched policies to support the internationalization of the renminbi. These efforts will bring new development opportunities for panda bonds, Wang said in the report.