Panda bonds gaining popularity, helping make RMB international

Following their record high issuance last year, the popularity of panda bonds, or renminbi-dominated bonds issued by overseas institutions in the Chinese onshore market, has caught high attention in the first quarter of this year.

Panda bonds have played an important role in introducing international issuers and investors, enriching the structure of China's bond market and expanding its opening-up to the outside world. In 2023, the annual issuance of panda bonds in China exceeded 150 billion yuan ($20.70 billion), with the number of issuers and issuance scales both increasing by more than 80 percent year-on-year.

Given the low interest rates of the US dollar in the past, most international companies generally prefer to complete bond issuance in the US bond market and then convert the funds into renminbi to fund their subsidiaries in China. However, as the dollar interest rates remain high, international companies now tend to issue renminbi bonds directly to meet their financing needs.