Panda bond issuance accelerates, and the attractiveness of the Renminbi significantly increases

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Our reporter Kou Jiali

Since the beginning of this year, the issuance pace of Panda Bonds has significantly accelerated. On March 31, the People’s Bank of China released data showing that from January to February 2026, a total of 50.44 billion yuan in Panda Bonds were issued, with four new overseas institutions entering the interbank bond market. Additionally, according to previous disclosures by the People’s Bank of China, in 2025, the total issuance of Panda Bonds reached 183.06 billion yuan, with 56 new overseas institutions entering the interbank bond market.

The steady expansion of institutional opening-up in the financial market has greatly facilitated Panda Bond issuance. On one hand, the institutional arrangements such as the equivalence of accounting standards and cooperation on audit supervision between China and other countries are continuously improving, reducing compliance costs for foreign institutions; on the other hand, the registration process for issuing Panda Bonds has been continuously simplified. Funds raised can be either remitted abroad for use or retained in domestic accounts for debt repayment or operational projects, greatly enhancing operational convenience.

“China’s macroeconomic operation remains stable, policy environment continues to optimize, and social stability provides a safe and reliable investment and financing environment for overseas institutions. This effectively reduces the policy risk faced by foreign institutions and enhances the credibility of RMB-denominated debt,” said Dong Qingma, Vice President of the China Financial Research Institute at Southwestern University of Finance and Economics.

According to the “Panda Bond Product Manual” issued by the China Interbank Market Dealers Association, Panda Bond issuers are divided into four categories: international development agencies, foreign government agencies, overseas financial institutions, and overseas non-financial enterprises. Currently, the number of issuers continues to grow, indicating increasing attractiveness of the RMB.

Tian Lihui, Professor of Finance at Nankai University, told Securities Daily that the motivation for overseas institutions to issue Panda Bonds has shifted from early “symbolic testing” to “substantive financing needs.” Some overseas institutions have made Panda Bonds a regular financing channel, even using them to replace high-interest foreign currency debt. This shows that the attractiveness of the RMB is not only due to currency stability or interest rate advantages but also because of the further opening of China’s financial markets, which provides global issuers with financing convenience and liquidity assurance. This is a systemic attraction.

According to the three-stage theory of currency internationalization, a country’s currency typically progresses through trade settlement currency, financial investment currency, and international reserve currency, with functions evolving from payment settlement to investment and financing, and then to global reserves.

Tian Lihui believes that the acceleration of Panda Bond issuance and the continuous increase in issuers reflect two profound changes in RMB internationalization: First, from a focus on payment and settlement to deeper investment and financing functions. In the past, RMB internationalization was mainly reflected in cross-border trade settlement, but the rise of Panda Bonds marks a significant enhancement of RMB’s international investment and financing functions, with overseas institutions willing to hold RMB and to conduct long-term financing in RMB; second, from offshore-driven to coordinated development of onshore and offshore markets. The simultaneous activity of Dim Sum Bonds and Panda Bonds indicates that RMB internationalization has formed a new pattern of mutual support and dual empowerment between onshore and offshore markets. Additionally, official institutions like foreign central banks are beginning to become important investors in Panda Bonds, indicating that RMB’s reserve function is gradually gaining broader recognition.

Meanwhile, the issuance volume of Panda Bonds shows a trend synergy with the amount of RMB settled in cross-border trade. Specifically, the RMB settlement demand accumulated by overseas institutions in cross-border trade drives their motivation for onshore financing to obtain RMB, thereby expanding Panda Bond issuance. At the same time, funds raised from Panda Bonds can be flexibly used for cross-border settlement, domestic investment, and other purposes, forming a virtuous cycle of “financing—use—deposition.” From this perspective, Panda Bonds are an important vehicle for RMB internationalization, transitioning from trade-driven to a dual-driven model of trade and capital.

朱华雷, Senior Investment Advisor at Shaanxi Jufeng Investment Information Co., Ltd., told Securities Daily that Panda Bonds have become one of the core bond varieties connecting domestic and foreign financial markets and promoting RMB internationalization. As China’s financial market institutional opening-up makes more substantive progress, the potential for Panda Bond expansion will be better unleashed.

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