The appeal of panda bonds has surged in 2026, with issuance volume reaching RMB88.24 billion (USD13 billion) in the first quarter, up 101.45% year on year in a record high for a single quarter.
Legal professionals say the renminbi’s rising international status, its cost advantages and deepening co-operation with China are among the key drivers behind the boom, which is expected to continue.
Several overseas sovereign issuers and international institutions have launched panda bonds in recent months, which are renminbi-denominated bonds issued by foreign entities in China’s domestic bond market.
The Slovenian government issued RMB4 billion in panda bonds on 2 April, becoming the first sovereign panda bond issuer of the year and the first eurozone country in central and eastern Europe to tap the market.
In the same month, sovereign wealth funds debuted in the panda bond market, with Kazakhstan’s sovereign wealth fund issuing the first panda bond from Central Asia, valued at RMB3 billion.
Zhu Li, a partner at Global Law Office, said: “This year’s panda bond market reflects long-term accumulation and preparation, and the market will continue to develop steadily and positively.” She led the team advising the lead underwriters on the Slovenian government’s panda bond issuance.
Yu Yongqiang, a JunHe partner who previously advised on the first panda bond issuances from North America and Africa, also predicted that the boom “will continue for a period of time”.
Commenting on the sustained growth in panda bond issuance, Zhu attributed it primarily to the renminbi’s rising international standing and expanding global influence, together with the cost advantages created by China’s monetary policy.
“China’s monetary policy has remained stable, while interest rates and exchange rate costs are controllable, giving issuers clear financing advantages. Market players are voting with their feet,” she said.
Yu added that panda bonds also enjoy a pricing advantages because “yields on renminbi-denominated bonds in the domestic market are currently relatively low and significantly below those on US dollar-denominated bonds, resulting in lower financing costs for issuers”.
Beyond financing costs, Yu said political and strategic considerations were also fuelling market growth. Some sovereign issuers are using panda bond issuance to deepen co-operation with China, seeking to participate in the Belt and Road Initiative and strengthen ties with Chinese authorities and financial markets. Meanwhile, multinational companies with extensive operations in China are turning to panda bonds to enhance their profile and visibility in this market.
Both lawyers highlighted the role of policy support. Zhu said regulators were encouraging more overseas central banks, international development institutions and multinational corporations to issue panda bonds in China.
The People’s Bank of China (PBoC) and the National Association of Financial Market Institutional Investors had continued to streamline issuance procedures; the PBoC and the State Administration of Foreign Exchange had refined fund management requirements; while policies from the tax authorities had also become clearer and remain in force, said Zhu.
Yu noted that the overall issuance process, including approvals and disclosure requirements, had become more streamlined and transparent than before.
Although panda bonds are broadly aligned with international capital market practices in terms of legal compliance including disclosure obligations, Zhu cautioned that issuers in public offerings must still ensure that “all issuance documents are disclosed in Chinese and comply with domestic bond issuance practice, including disclosure of material matters”.
In addition, transaction documents are governed by PRC law and related matters require opinions from Chinese legal counsel, she added.
Looking ahead, Yu said potential factors that could curb further expansion of the panda bond market include US dollar interest rate cuts and tighter controls on cross-border renminbi flows.
“Some issuers intend to remit proceeds offshore after issuing panda bonds, so tighter capital controls could dampen issuance appetite,” he said. “However, based on the current stance, regulators appear to be continuing their gradual opening-up of the panda bond market.”
Zhu also expressed optimism about the market’s prospects, citing a principle repeatedly emphasised by Chinese President Xi Jinping: “‘China’s door of opening-up will not close and will only open wider,’” she said. “I believe the same applies to the panda bond market. Both issuers and investors are benefiting, and the user experience has been positive.”