The Panda bond market has gotten off to a strong start in 2026.
On January 6, China Gas Holdings Limited took the lead by issuing two Panda bonds, raising the curtain on the market for the year; on January 7, Henkel Hong Kong Holdings Limited quickly followed suit, successfully issuing one Panda bond.
As RMB-denominated bonds issued by overseas institutions in China's domestic market, Panda bonds are not only a core vehicle for the two-way opening of China's capital markets and the internationalization of the Renminbi, but also a crucial platform for the institutional opening of the financial markets. After years of development, the Panda bond market has entered a mature expansion phase, characterized by steady growth in issuance volume and continuous optimization in structure across various dimensions, including issuer profiles, product types, and maturity configurations.
Experts interviewed stated that China's Panda bond market is expected to continue its high-quality development trajectory this year, with issuance volume likely to achieve moderate growth. The proportion of non-Chinese-background issuers is set to increase further, becoming the dominant force in the market. Concurrently, trends toward product innovation, longer maturities, and structural optimization will deepen, although external risks still require close attention. Driven by both favorable policies and institutional opening, the Panda bond market's function as an investment and financing platform will become more prominent, injecting stronger momentum into RMB internationalization and the two-way opening of capital markets.
The Panda bond market is showing a multi-dimensional structural optimization trend. The Panda bond market demonstrated a bright start in 2026. According to Wind data, the total issuance size of the aforementioned three Panda bonds reached 2.5 billion yuan, a 66.67% increase compared to the same period in 2025. Among them, China Gas Holdings Limited raised 1 billion yuan, intended for repaying the issuer's upcoming maturing debt financing instruments; Henkel Hong Kong Holdings Limited raised 1.5 billion yuan, planned for repaying and refinancing RMB-denominated loans in Hong Kong.
In fact, the Panda bond market has maintained high activity levels in recent years. Data shows that China's Panda bond market entered a rapid growth channel from the end of 2022, with issuance volume hitting a record high of 194.8 billion yuan in 2024. Although the total issuance in 2025 saw a year-on-year decrease to 183.56 billion yuan, the net financing scale reached a new high, exceeding 100 billion yuan in net financing. This pushed the outstanding balance of Panda bonds past 420 billion yuan, an increase of approximately 32% from the end of 2024, and the cumulative issuance volume surpassed the 1.1 trillion yuan mark, representing a solid step in the opening-up process of China's bond market.
Liang Huaxin, an analyst from the International Business Rating Department of CSCI Pengyuan, stated that the slight decline in Panda bond issuance volume in 2025 was primarily due to a 42% decrease in maturing bonds compared to 2024, which significantly reduced the refinancing pressure on issuers and consequently lowered their active debt issuance demand.
China's Panda bond market is exhibiting a trend of multi-dimensional structural optimization. On one hand, the issuer structure is improving, with the proportion of purely foreign-funded entities rising significantly. Taking 2025 as an example, the participation rate of wholly foreign-owned enterprises/foreign-funded enterprises in Panda bond issuance reached 22.58%, an increase of 5.15 percentage points from 2024.
On the other hand, the product and maturity structure is becoming increasingly mature, with innovative varieties and a trend towards longer maturities becoming prominent. In terms of maturity, Panda bonds with issuance terms of 5 years or more accounted for 31.45% of the total in 2025, up 2.09 percentage points from 2024, leading to a more balanced maturity configuration that effectively enhances market stability. Regarding product innovation, varieties such as green bonds, sustainability bonds, and science and technology innovation bonds continued to emerge, for instance, the Asian Infrastructure Investment Bank issued a 2 billion yuan Sustainability Panda Bond in July 2025, enriching the spectrum of Panda bond products.
It is worth mentioning that recently, the Industrial and Commercial Bank of China and the China Central Depository & Clearing Co., Ltd. jointly launched the country's first bond series index reflecting the Panda bond market—the "CCDC-ICBC Panda Bond Series Index." This will further enhance market transparency and liquidity, provide authoritative reference standards for participants, and promote the Panda bond market's evolution from a simple financing channel to a high-quality investment and financing platform.
In Liang Huaxin's view, Panda bonds are not only a key vehicle in the process of RMB internationalization but also an important link in promoting the cross-border circulation of the Renminbi. By providing convenient and efficient direct RMB financing channels for Hong Kong-funded and foreign institutions, the Panda bond market can effectively help build a complete international circulation mechanism for the Renminbi, further enhancing the global allocation value and attractiveness of RMB assets and injecting sustained momentum into RMB internationalization.
Issuance volume is expected to maintain moderate growth. Regarding the reasons for the high activity in China's Panda bond market, industry insiders believe that, on one hand, China's stable and accommodative monetary policy has created a low-interest-rate environment. Coupled with the interest rate differential between China and the US, the cost advantage of RMB financing is significant, serving as a core attraction for overseas issuers. On the other hand, the institutional opening of China's financial markets continues to deepen, with rules from market access and fund usage to information disclosure increasingly aligning with international standards, further enhancing issuance convenience.
Entering 2026, favorable policies continue to be released. The People's Bank of China Work Conference held on January 5-6, 2026, explicitly stated, "Welcome more eligible overseas entities to issue Panda bonds," and emphasized "continuing to optimize the arrangements for the Bond Connect and Swap Connect mechanisms." Simultaneously, local authorities are also making efforts; the "Several Provisions of Shanghai Pudong New Area on the Development of Free Trade Offshore Bond Business" will take effect on March 1, 2026, providing institutional guarantees for the standardized and scaled development of the free trade offshore bond business.
"The deepening of RMB internationalization, the optimization of Panda bond issuance systems, and the increase in allocation demand from the investment side are the main drivers continuously fueling the development of the Panda bond market," Liang Huaxin said. He added that the rising refinancing demand due to increasing maturities of Panda bonds from 2026 to 2027, combined with advantages such as declining domestic financing costs, will jointly support moderate growth in Panda bond issuance volume in 2026, highlighting the market's development resilience.
Bai Xue, Senior Associate Director of the Research and Development Department at Golden Credit Rating International, stated in an interview that the issuance amount proportion of non-Chinese-background issuers is expected to increase further in 2026, becoming the dominant market force. As mechanisms like Bond Connect and Swap Connect are continuously optimized, and with Chinese bond markets being included in more international indices, increased demand from long-term investors such as global sovereign wealth funds, pension funds, and asset management companies for Panda bonds will attract more foreign governments, international organizations, and multinational corporations into the market.
However, it is important to note that while the Panda bond market welcomes multiple development opportunities and its resilience becomes increasingly evident, potential uncertainties that could impact the market's stable operation still need vigilance.
Bai Xue cautioned that in 2026, China's Panda bond market still needs to focus on four core external risks: exchange rate fluctuations, cross-border capital flow restrictions, changes in global interest rate trends, and geopolitics. Increased two-way volatility of the RMB will directly affect the debt servicing costs of overseas issuers and the actual returns of investors. Tighter management of cross-border capital flows could suppress market scale from both the issuance and investment ends. Uncertainty in interest rate trends resulting from monetary policy adjustments by major global central banks will have complex effects on the market's financing advantages and investment demand. While geopolitical conflicts might trigger short-term selling pressure, the long-term stability of China's bond market is expected to gain support by attracting safe-haven capital.