Half-Month Issuance Exceeds Last Year's Monthly Volume! Panda Bonds Continue to Heat Up in March, Institutions Recommend Mining "Carry and Leverage" Strategy

China Foreign Exchange Trade System News, March 13 (Editor: Zhang Liang, Intern: Liang Zefeng)
As a key vehicle for overseas institutions to participate in China’s bond market and promote the internationalization of the Renminbi, Panda Bonds continue to see strong issuance at the start of 2026 spring.

Since March, major foreign banks and multilateral development institutions have repeatedly issued Panda Bonds. Dah Sing Bank, BNP Paribas, Deutsche Bank, and Asian Infrastructure Investment Bank have successively issued Panda Bonds. Under the combined effects of low domestic financing costs and rising Renminbi demand, the Panda Bond market is experiencing a high-quality expansion opportunity.

Total issuance exceeds 1 trillion yuan, Panda Bond market remains active in March

Panda Bonds refer to bonds issued in China by overseas entities (including foreign companies and offshore Chinese institutions) denominated in Renminbi.

In recent years, the Panda Bond market has seen continuous growth. According to China Chengxin Research reports, by 2025, the total issuance scale had surpassed 1 trillion yuan, reaching 1.159 trillion yuan. In 2025, the issuance volume exceeded 180 billion yuan, ranking second in history, with nearly 50% issued by purely offshore entities, setting a new record.

In terms of maturity structure, Panda Bonds are gradually shifting toward medium and long-term maturities, with 3-year and 5-year bonds becoming dominant. The proportion of bonds with a maturity of 5 years or more significantly increased to over 30% in 2025, reflecting growing investor confidence in the long-term development of Panda Bonds.

Since March, the Panda Bond market has remained highly active. According to data from Enterprise Early Warning System compiled by China Foreign Exchange Trade System, in just the first two weeks of March, issuance reached 15.5 billion yuan, surpassing the total issuance of 130.5 billion yuan in all of March 2025.

Additionally, in March, a total of 9 Panda Bonds were issued across the market, with frequent appearances by major foreign banks. Deutsche Bank issued a total of 5.5 billion yuan in commercial bank bonds in two phases, with 3-year Panda Bonds at an interest rate of 1.95% and 5-year at 2.13%. The Asian Infrastructure Investment Bank issued 3 billion yuan in international institutional bonds at an interest rate of 1.7%.

(Source: Enterprise Early Warning System, China Foreign Exchange Trade System)

Notably, three newly issued Panda Bonds are about to start accruing interest. BNP Paribas plans to issue a total of 5 billion yuan in commercial bank bonds in two phases on March 17, for general corporate purposes, business activities, and development, with interest payments starting on March 18. Dah Sing Bank plans to issue 5 billion yuan in 3-year commercial bank bonds on March 18, with interest payments beginning on March 20.

Lower costs and policy benefits enhance Panda Bond attractiveness

Why are overseas institutions increasingly participating in the Panda Bond market? According to related research reports summarized by China Foreign Exchange Trade System, this is mainly due to the low interest rate financing environment, ongoing policy optimizations, and rising Renminbi demand.

United Credit Ratings states that under a moderately easing monetary policy, the domestic market continues to maintain low interest rates. For example, the 3-year AAA-rated Panda Bonds issued in the interbank market had an average fixed rate of 2.3% in 2025, a historic low. Despite significant divergence in the Federal Reserve’s monetary policy outlook—whether to continue easing or to slow rate cuts—the relative financing cost advantage of the Renminbi remains.

United Credit Ratings further notes that in 2026, the Panda Bond market will face a peak in maturity repayments, with a total of 113.23 billion yuan due within the year, nearly doubling from the previous year. Entities such as the New Development Bank, BMW China Capital, and Beijing Capital Group, which face substantial repayment pressures, are expected to continue supporting the primary market issuance through refinancing.

China Chengxin points out that policy signals of support continue to be released, providing a solid foundation for market development. On fiscal and tax support, the Ministry of Finance and the State Taxation Administration have clarified that, during 2026-2027, interest income from bonds held by offshore institutions investing in the domestic bond market will be temporarily exempt from corporate income tax and value-added tax, further enhancing the attractiveness of Renminbi bonds. The People’s Bank of China’s 2026 work conference also explicitly welcomed more qualified offshore entities to issue Panda Bonds and committed to further deepening high-level financial market opening and facilitating cross-border use of the Renminbi. As the internationalization of the Renminbi continues to deepen in cross-border payments and financial transactions, Panda Bonds, as an important vehicle for promoting the Renminbi’s internationalization, will continue to benefit.

Market expansion opportunities and institutional strategies

What is the outlook and investment value of Panda Bonds in the coming years? Several institutions have provided forecasts for 2026.

United Credit Ratings believes that under the joint promotion of the Belt and Road Initiative and multilateral mechanisms, the Panda Bond market will see opportunities for expansion with diverse participants. As cross-border Renminbi infrastructure improves and market openness increases, more diverse issuers are expected to enter. It is projected that Panda Bonds will remain highly active in 2026, with issuance volumes continuing at high levels.

China Chengxin suggests that mature issuers’ refinancing needs will continue to support market development. Emerging economies and multinational corporations, driven by project financing, expanding Renminbi usage, and support from multilateral institutions, are likely to be key growth drivers. Additionally, improvements in credit rating systems, enhanced cross-border information disclosure, and optimized capital flow management mechanisms could be critical factors influencing market expansion.

Shenwan Hongyuan forecasts that in 2026, the bond market may continue to exhibit characteristics of “low interest rates and high volatility.” With inflation expectations improving and risks of long-term interest rate increases persisting, while short- and medium-term credit spreads remain attractive, strategies involving carry trades and leverage in short- to medium-term credit bonds have high relative value. The Panda Bond market, with its generally shorter duration, aligns well with institutional preferences. Coupled with the ongoing push for Renminbi internationalization, the market size is expected to grow rapidly, and investment opportunities in niche segments are worth noting.

(China Foreign Exchange Trade System News, Zhang Liang, Intern: Liang Zefeng)