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On July 24, a US-based financial institution issued its debut panda bonds, marking the first time a U.S.-headquartered company has sold yuan-denominated notes in China’s interbank bond market. The issuance included CNY2 billion (approximately USD278.7 million) of five-year bonds with a coupon rate of 1.98%, according to the China Interbank Market Dealers Association. The bonds drew strong interest from a broad spectrum of domestic investors, providing valuable, high-quality assets to the bond market and representing a significant move towards open market policies.
Panda bonds have become an important avenue for foreign entities seeking yuan financing, including various international banks and government agencies such as the Asian Infrastructure Investment Bank, the New Development Bank, the Asian Development Bank, along with governments of Hungary and Egypt. Major multinational corporations like Mercedes-Benz, BMW, Volkswagen, and BASF have also issued these bonds.
The association behind the market stated that it will continue to promote high-level opening strategies within the financial sector, under the guidance of the central bank. This effort aims to broaden the range of foreign issuers, fostering higher-quality market development and further opening the bond industry to international participation.
Year-to-date, total panda bond sales have reached CNY111.2 billion (around USD15.5 billion). Foreign governments, international development banks, and multinational firms now represent half of this total—more than doubling the proportion compared to last year, which was less than 25%.
Recent notable issuances include the Asian Infrastructure Investment Bank, which sold CNY2 billion of two-year panda bonds on July 14. The Hungarian government issued CNY4 billion of three-year bonds with a 2.5% coupon rate—the largest single foreign government issuance of this type—along with CNY1 billion of five-year bonds at a 2.9% coupon, marking the first five-year foreign government panda bond.
Other nations and regions, such as South Korea, British Columbia in Canada, Poland, and Egypt, have also issued panda bonds totaling CNY35.5 billion (about USD4.9 billion). International financial institutions continue to participate actively, with organizations like the National Bank of Canada, Crédit Agricole, Deutsche Bank, and United Overseas Bank repeatedly issuing these bonds in China.
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