Panda bond issuance and subscription in the first quarter are thriving, with the domestic financing environment's attractiveness continuing to rise.

Source: Shanghai Securities News
Author: Zhang Xinran Huang Bingyu

Driven by multiple factors such as an advantage in domestic financing costs, the continued advancement of institutional-style opening up, and increased demand for Renminbi asset allocation, the Panda bond market has continued to heat up. As of March 20, 2026, the Panda bond market’s issuance volume this year reached RMB 77.94B, up 96.8% from the same period last year. Changes have also emerged in the issuer structure, the maturity structure, and the market’s functions.

With the Panda bond market staying hot, the first thing to note is the appeal of the domestic financing environment. Liang Huaxin, an analyst in the International Business Ratings Department of CICC (China Chengxin) Credit Rating, told Shanghai Securities News reporter that the market’s current activity can be summarized as the convergence of three forces: “timing, geographic advantages, and people.” “Timing” refers to China’s relatively loose monetary environment, which highlights the advantage of Renminbi financing costs. “Geographic advantages” refers to China’s continued progress in two-way opening of financial markets, along with ongoing improvement of the Panda bond issuance system and supporting infrastructure, which reduces issuance friction costs. “People” refers to the fact that in a low-interest-rate environment, investors’ demand for allocations to high-quality Renminbi assets has increased noticeably.

Cheng Zeyu, a senior analyst in the Sovereign Department of United Credit Rating, also said that since the Panda bond market began in 2005, it has moved from early pilot exploration into a mature phase of expansion. Entering 2026, the Panda bond market continues to show strong growth momentum. In his view, this round of expansion is not driven by a single factor, but rather the combined result of advantages in financing costs, the dividends of institutional-style openness, rising attractiveness of Renminbi assets, and the concentrated release of refinancing demand.

From the perspective of market structure, changes are equally clear: first, the participation level of foreign investor entities has increased. Liang Huaxin said that in 2025, the number of Panda bond issuances and issuance scale by pure foreign-invested entities accounted for 34% and 47% of the total market issuance for the full year, respectively—higher than 27% and 38% in 2024. Entering 2026, participation by pure foreign-invested entities remains active, and the market’s warmth is expected to continue throughout the year. Second, the maturity structure has gradually lengthened. Cheng Zeyu said that in 2025, 3-year and 5-year tenor products have become the mainstay, with issuance size shares reaching 60% and 20%, respectively. Third, credit quality has remained at a high level. Liang Huaxin noted that the Panda bond market is still dominated by AAA-rated issuers, reflecting sustained attractiveness to high-quality issuers.

Zhuyang Zhu, General Manager of Deutsche Bank’s China branch, told Shanghai Securities News reporter that Deutsche Bank is the first European financial institution to issue Panda bonds this year, and it has also set a record for the single-issuance Panda bond size by a foreign bank.

In addition to the advantage in financing costs, continued deepening of institutional-style opening up also provides a more solid foundation for the expansion of the Panda bond market. Liang Huaxin said that the recent heat in the Panda bond market is not a flash in the pan, but rather “act after planning.” From gradually unifying cross-market rules, to the rollout of the DFI registration model, and then to the implementation of cross-border cash-pooling arrangements, a series of key bottlenecks in the Panda bond market have been progressively addressed, which will increase overseas issuers’ willingness to issue.

Looking ahead, interviewees generally believe that the Panda bond market still has substantial room for development, and that internationalization and diversification will be the main themes in the next stage.

Liang Huaxin said that the current Panda bond market has formed a pattern of “red-chips laying the foundation, and foreign capital moving in together.” The main potential growth points in the future mainly include three types of entities: first, national government institutions with relatively stable commercial and trade ties with China; second, foreign-invested enterprises with a solid business foundation in China and plans to further expand their investment in China; and third, overseas financial institutions with strong capital strength and large Renminbi business volumes.

“Regulatory authorities have always taken a supportive attitude toward the Panda bond market, encouraging more global issuers to enter this market. In the future, if foreign bank capital instruments can be further accepted, the space of the Panda bond market will continue to open up.” Zhu彤 said.

(Editor: Wen Jing)

Keywords:

                                                            Panda bonds