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

Since the beginning of this year, the issuance pace of panda bonds has noticeably accelerated. On March 31, data released by the People’s Bank of China showed that in January to February 2026, panda bonds saw a cumulative issuance of 50.44 billion yuan, with four additional overseas institutions entering the interbank bond market. Earlier, the People’s Bank of China had also disclosed that in 2025, panda bonds recorded a cumulative issuance of 183.06 billion yuan, with 56 additional overseas institutions entering the interbank bond market.

The steady expansion of institutional-level opening in financial markets has provided great convenience for panda bond issuance. On the one hand, institutional arrangements between China and other countries—such as equivalence of accounting standards and cooperation on audit and regulatory oversight—are being continuously improved, which opens up room to lower compliance costs for overseas institutions. On the other hand, the registration process for issuing panda bonds has continued to be simplified. The proceeds can be remitted abroad for use or kept in domestic accounts for repaying debt or funding operating projects, greatly improving operational convenience.

“China’s macroeconomic performance has been steady, the policy environment has continued to improve, and the overall social situation remains stable, providing overseas institutions with a safe and reliable environment for investment and financing, effectively reducing the policy-change risks faced by overseas institutions, and enhancing the credibility of issuing debt denominated in renminbi.” Dong Qingma, deputy dean of the China Finance Research Institute at Southwestern University of Finance and Economics, said.

According to the “Panda Bond Product Manual” issued by the National Association of Financial Market Institutional Investors of China Interbank Market, panda bond issuers are divided into four categories: international development institutions, foreign government-type institutions, overseas financial institutions, and overseas non-financial enterprises. At this stage, the number of issuers continues to increase, indicating that the appeal of renminbi is rising.

Tian Lihui, a professor of finance at Nankai University, said in an interview with Securities Daily that the motivation for overseas institutions to issue panda bonds has shifted from the early “symbolic trial” to “realistic financing needs.” Some overseas institutions have already treated panda bonds as a standardized financing channel, even using them to refinance high-interest foreign-currency debt. This shows that the appeal of renminbi stems not only from currency stability or interest-rate spread advantages, but also from the financing convenience and liquidity support provided to global issuers after China’s financial markets have further opened up. This is a system-wide appeal.

Under the three-stage theory of currency internationalization, a country’s currency typically moves toward internationalization in stages, usually categorized as trade settlement currencies, financial investment currencies, and international reserve currencies, with functions progressing from payment and settlement toward investment and financing and then global reserve use.

Tian Lihui believes that the faster issuance of panda bonds and the continued increase in the number of issuers reflect two profound shifts in renminbi internationalization: first, the deepening from the payment-and-settlement function to the investment-and-financing function. In the past, renminbi internationalization was more reflected in cross-border trade settlement, while the rise of panda bonds signals a significant strengthening of renminbi’s international investment-and-financing function. Overseas institutions are willing not only to hold renminbi, but also more willing to use renminbi for long-term financing. Second, the evolution from an offshore-driven model to coordinated development between onshore and offshore. The synchronized vitality of dim sum bonds and panda bonds indicates that renminbi internationalization has formed a new pattern in which the onshore and offshore markets support each other and empower each other in both directions. In addition, overseas official institutions such as central banks have begun to become important investors in panda bonds, meaning the reserve function of renminbi is being recognized more broadly and gradually.

Meanwhile, the issuance volume of panda bonds shows trend-level synergy with cross-border trade settlement amounts in renminbi. Specifically, the renminbi settlement demand accumulated by overseas institutions in cross-border trade creates their motivation to obtain renminbi through onshore financing, thereby driving the expansion of panda bond issuance. At the same time, the proceeds raised from issuing panda bonds can also be flexibly used for cross-border settlement, domestic investments, and other purposes, forming a virtuous cycle of “financing—use—retention.” From this perspective, panda bonds are an important vehicle for renminbi internationalization to move from trade-driven to a dual-wheel drive of trade and capital.

Zhu Huale, a senior investment advisor at Shaanxi Jufeng Investment Information Co., Ltd., said in an interview with Securities Daily that panda bonds have become one of the core bond instruments connecting domestic and overseas financial markets and advancing renminbi internationalization. With our country’s financial markets’ institutional-level opening achieving more substantive progress, the potential for panda bonds to expand will be better unlocked.