Panda bonds Photo: screenshot of the Securities Daily

Favorable interest rate spreads, flexible use of proceeds and streamlined issuance procedures have become the three key drivers behind the "sudden" popularity of panda bonds issuance this year. In the first half of 2026, issuance volume has exceeded 160 billion yuan ($23.57 billion), marking an annual growth rate of over 60 percent, state broadcaster CCTV News reported on Sunday.

Panda bonds refer to renminbi-denominated bonds issued by overseas entities in China. The boom in panda bonds is, in essence, a powerful vote of confidence in China's financial markets, the yuan's stability, and the value of yuan-denominated assets. As a growing number of high-quality overseas issuers tap into the market, China's bond market will become more open and mature. At the same time, this trend will expand the yuan's cross-border use, bolster its international investment and financing functions, and give a substantial push to the currency's internationalization, CCTV reported.

Borrowing interest rates at dollar-denominated markets ranged at 4.5-5.5 percent currently while panda bonds rates issued by foreign institutions averaged at 1.85 percent, with some going as low as 1.7 percent, CCTV News reported.

In late June, Brazil became the first Latin American country to register for sovereign panda bond issuance, and the Chinese government welcomes the participation of both the Brazilian government and corporate entities in the panda bond market, according to a statement on the official WeChat account of the People's Bank of China, China's central bank.

The move by Brazil followed a number of countries and corporations. On May 15, the Asian Infrastructure Investment Bank, together with the Asian Development Bank, announced that it is supporting Pakistan's first renminbi-denominated panda bonds issuance worth 1.75 billion yuan. According to the Xinhua News Agency, this marks Pakistan's first such sovereign bond in offshore capital markets.

In March, Slovenia issued its first panda bond, raising 4 billion yuan, as it seeks to diversify funding sources and expand access to investors, the Xinhua News Agency reported.

Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Sunday that as the use of the yuan in trade settlement is expanding significantly, yuan internationalization has made great strides in recent years and the currency is more recognized globally.

"As many of the countries issuing panda bonds this year are major emerging economies representing the Global South, such insurances also strengthen South-South cooperation and advance the interests of the Global South in international financial governance," Dong said.

In recent years, the panda bonds market has seen steady gains, becoming increasingly attractive to international issuers. The issuance volume hit a record 197.8 billion yuan in 2024 and totaled 183.1 billion yuan in 2025, according to a CNBC report on June 17, citing data from Moody's.

The trend comes as more countries view the Chinese yuan as a choice of investment diversification, as the world has entered a new period of turbulence and transformation, where the challenges confronting developing countries are particularly acute.

According to a report by the London-based Official Monetary and Financial Institutions Forum released last week, nearly all surveyed respondents view the Chinese yuan as an effective means of portfolio diversification.

The most attractive markets were the US and China, in part driven by their role in the AI boom, according to the survey of 90 central banks, public pension funds and sovereign funds by the London-based thinktank set up in 2010. Survey participants collectively oversee some $10 trillion in assets.⁠

According to data from the PBC, more than 170 billion yuan of panda bonds were issued by governments, international development institutions, financial firms and large corporations from multiple countries in 2025, with the outstanding volume rising 34 percent year-on-year, according to Xinhua.