Xiaomi will issue RMB 8 billion (USD 1.13 billion) in panda bonds to mitigate the impact of the coronavirus, Reuters reported, as the Chinese smartphone maker has been forced to shut down its manufacturing facilities in India amid the health crisis.
Panda bonds are yuan-denominated bonds from non-Chinese issuers that are sold in China. The first RMB 1 billion tranche of private placement notes will have a fixed coupon and a tenor of three years. Proceeds from the bonds will be used to repay interest on loans for projects, fund working capital, and support the company during the coronavirus pandemic, Reuters wrote.
Xiaomi’s bond issuance plan comes as China has been slowly going back to normal, with manufacturing activities resuming, while operations abroad continue to be severely disrupted.
India is the world’s second-largest smartphone market, and Xiaomi is the country’s largest smartphone vendor, with a market share of nearly 30%. Recently, several states in India have issued lockdown orders to curb the spread of coronavirus. As a result, many electronics manufacturers who set up plants in the country, including Samsung, Xiaomi, and Vivo, have had to pause production.
“Every facility, such as corporate offices, warehouses, service centers, […] and manufacturing plants will abide by the lockdown orders. In the meantime, we will vigilantly monitor the situation round the clock,” said Manu Jain, Vice President of Xiaomi and Managing Director of Xiaomi India, on Monday.
Xiaomi has seven factories in India, established in partnership with contract manufacturers Foxconn and Flex, employing over 300,000 staff.
The global smartphone market has seen a tumble due to the coronavirus—worldwide shipments in the second quarter of 2020 are predicted to decline 26% year-on-year, per a report from investment banking firm China International Capital Corporation.