Panda bond issuance has already surpassed last year's full-year total since the start of 2026, with the asset class gaining growing traction among global issuers. Official data through September 17 shows issuance volume topping 240 billion yuan across 135 bonds, representing year-on-year increases of 81% and 65%, respectively.
These instruments, which are yuan-denominated debt sold by overseas entities within China's onshore market, serve as a vital channel for broadening cross-border yuan financing and advancing the currency's internationalization. Looking at the issuer landscape this year, the share of pure foreign issuers has climbed notably, with sovereign borrowers emerging as a key source of incremental supply. Slovenia, Pakistan, Kazakhstan, and Indonesia have each made their debut panda bond offerings during this period.
Brazil's finance ministry has submitted an application letter to Chinese authorities, positioning the country to potentially become the first Latin American nation to register a sovereign panda bond. Foreign financial institutions are also joining the fray in force. Deutsche Bank has accumulated 9 billion yuan in issuance so far this year, while Crédit Agricole has raised 6 billion yuan, including a debut 7-year tranche. BNP Paribas has tapped the market twice in 2026, with combined issuance reaching 11 billion yuan.
In August, UBS successfully priced a 2 billion yuan, 5-year panda bond, marking the first such issuance by a Swiss financial institution in China, with subscriptions exceeding three times the offered amount. Chris Chady, head of funding strategy at UBS, noted that China's onshore bond market is large and increasingly mature, and participating in it has diversified the bank's funding sources while improving efficiency and flexibility.
A host of international institutions are also choosing panda bonds for their funding needs. This year alone, the New Development Bank, Asian Infrastructure Investment Bank, and Asian Development Bank have issued 14 billion yuan, 3 billion yuan, and 8 billion yuan, respectively. These institutions view China's onshore bond market as a stable and resilient venue amid global market volatility, which continues to make it highly attractive for issuers.
People's Bank of China Deputy Governor Zou Lan stated that international institutions issuing panda bonds reflects full recognition of China's institutional environment, development prospects, and the yuan itself. This also enriches the channels for global investors to allocate yuan assets, fostering a sustainable ecosystem for yuan usage.
Relatively low yuan financing costs are the primary driver behind the record issuance. "Rates for major foreign banks issuing panda bonds range roughly between 1.7% and 2.2%, whereas borrowing the same amount in the dollar market would cost 4.5% to 5.5%. As the Fed embarks on a rate hike cycle, the cost advantage of panda bonds is set to become even more pronounced," said Zhang Jun, chief economist at China Galaxy Securities. He added that China has been streamlining the panda bond registration and issuance framework in recent years, loosening rules on the use of raised funds. Explicitly allowing proceeds to be remitted offshore has made capital deployment more flexible, reinforcing confidence among overseas issuers in the market's steady growth.
On the investor side, the appetite for panda bonds remains exceptionally strong, driven by asset safety and stable returns. Some offerings have seen subscription multiples exceeding five times the issuance size. Zou Lan noted that panda bonds have gained broad acceptance among domestic investors, while offshore institutional investors, being more familiar with the issuers, also treat them as primary investment and trading instruments.
In the first half of 2026, cumulative panda bond trading volume reached 342.6 billion yuan, a 49% year-on-year increase. The number of institutions participating in panda bond trading rose to 2,493, up 599 from a year earlier. Additionally, as China's financial markets open up in an orderly manner, interconnectivity mechanisms such as Bond Connect continue to expand and upgrade, facilitating smoother cross-border yuan flows and strengthening offshore institutions' willingness to hold panda bonds.
Reports indicate that overseas investors' appetite for yuan assets has been steadily climbing. PBOC data shows that foreign entities currently hold more than 11 trillion yuan in onshore financial assets, and central banks or monetary authorities from over 80 countries and regions have incorporated the yuan into their foreign exchange reserves. Yuan bonds and equities have also been included in major global asset trading indices. The rising Standard Chartered Renminbi Global Index (RGI) corroborates this trend, climbing from 227.1 in April to 235 in July, a 3.5% gain that signals expanding yuan usage.
Cumulative panda bond issuance has now exceeded 1.3 trillion yuan, with issuers spanning 26 countries and regions across five continents. According to the PBOC's Q2 2026 monetary policy implementation report, the central bank will support more qualified overseas entities in issuing panda bonds in the next phase. "As offshore institutions gain greater convenience in participating in onshore panda bond issuance and trading, and as yuan internationalization advances steadily, panda bonds are poised to achieve new breakthroughs in issuance scale, product innovation, and investor breadth, injecting sustained momentum into the high-level opening of China's financial markets," Zhang Jun concluded.