China's Panda Bond Issuance Scale Reaches Record High, Foreign Capital Ratio Continues to Rise
Alina Collins
Panda bond issuance reached roughly RMB 133 billion in the first five months of 2026, nearly doubling year-on-year, as low rates pull sovereigns and multinationals alike into China's debt market.
What is a Panda bond, and why the sudden rush?
Panda bonds — renminbi-denominated bonds issued by foreign entities onshore in mainland China — hit roughly RMB 133 billion in the first five months, already 68% of full-year 2024 volume.
The driver is a rate gap: China's 10-year government bond yield sits at just 1.73%, down about 0.8 percentage points since the Iran war began in late February. Over the same period, US, Japanese, and German yields have moved higher.
This means → for offshore borrowers, issuing in China is far cheaper than raising money at home, and the window keeps widening.
Who is borrowing, and how much?
Sovereigns: Pakistan completed its debut Panda bond in mid-May — RMB 1.75 billion, three-year, with a 2.5% coupon versus its domestic benchmark of 11.5%. The ADB and AIIB provided partial guarantees. Kazakhstan followed with RMB 3.4 billion; Indonesia is reportedly preparing to enter.
Corporates: Deutsche Bank issued RMB 5.5 billion in March, calling it the largest single Panda bond by a foreign bank. BNP Paribas issued RMB 5 billion; Volkswagen raised RMB 3 billion in May, after BMW, BASF, and Henkel had already tapped the market.
In plain terms = from Middle-Eastern sovereigns to German carmakers, everyone is chasing the same window — China's low-rate environment.
Why does the rising foreign share matter?
S&P Global (China) data show that foreign enterprises' share of total Panda bond issuance rose from 27% in 2023 to 41% in Q1 2026.
Eric Liu, co-head of Asian fixed income at AllianceBernstein, said blue-chip multinationals are drawing institutional investors in because these issuers "are more familiar than lesser-known Chinese names."
This reflects a structural shift: the Panda bond market is moving from "Chinese firms issuing via offshore shells" toward genuine foreign issuance.
What are the market's weak spots?
Secondary-market liquidity remains thin — once you buy, it is hard to trade out.
The all-time largest issuer is dairy company Mengniu, with cumulative issuance near RMB 160 billion. Most of that is Chinese companies routing issuance through offshore entities, not true foreign demand.
Put simply = volume is growing, but trading activity and the genuine foreign content of the issuer base are the real measures of maturity.
How long can low rates last?
Frances Cheung, head of FX and rates strategy at OCBC, noted that China's PPI was in deflation for over three consecutive years before turning positive in March. Moderate inflation plus extremely weak loan demand have created "ample liquidity and strong bond demand."
Domestic demand remains soft: April retail sales grew just 0.2% year-on-year, and the property market is showing fresh signs of cooling. Large-scale coal and renewable-energy capacity helps offset rising oil prices.
This means → as long as domestic demand and inflation stay subdued, the low-rate environment is unlikely to reverse — and the Panda bond window stays wide open.
Content is for reference only, not financial advice.