FINANCE

Morgan Stanley Joins Rush for Cheap China Capital With Landmark Bond Deal

Published: Jul. 29, 2025 5:08 a.m. GMT+8

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The Morgan Stanley headquarters in New York, US, on July 15, 2025. Photo: Bloomberg

Morgan Stanley has become the first U.S.-headquartered company to access Chinese mainland’s domestic bond market, a landmark deal as global institutions rush to tap the country’s low-cost capital.

The Wall Street bank last week raised 2 billion yuan ($279 million) via a five-year private placement bond with a 1.98% coupon, according to a filing.

The deal highlights growing activity in the so-called Panda bond market — yuan-denominated debt sold by foreign issuers in the Chinese mainland — which has surged amid falling borrowing costs.

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Morgan Stanley became the first U.S.-headquartered firm to issue a domestic Chinese bond, raising 2 billion yuan ($279 million) with a 1.98% coupon.
Panda bond issuance in 2024's interbank market reached 111.2 billion yuan, with foreign issuers’ share rising 27 percentage points.
Falling Chinese rates mean Panda bond yields are over 50 basis points lower than comparable offshore U.S. dollar bonds, fueling increased foreign issuance.

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Who’s Who

Morgan Stanley: Morgan Stanley recently accessed China's domestic bond market, marking a significant move for a U.S.-headquartered company. They raised 2 billion yuan ($279 million) through a five-year private placement bond with a 1.98% coupon. This highlights their participation in the growing Panda bond market, driven by China's low-rate environment offering cost advantages.

BMW: BMW is among the foreign issuers expected to release new Panda bonds in the Chinese mainland, with offerings anticipated in July. This contributes to the growing activity in the Panda bond market, which is attractive due to China's low interest rates, offering a cost advantage over comparable U.S. dollar bonds.

Asian Infrastructure Investment Bank: The Asian Infrastructure Investment Bank is expected to issue new Panda bonds in July. These yuan-denominated bonds are sold by foreign issuers in mainland China. The issuance of Panda bonds has surged due to falling borrowing costs, offering a clear cost advantage over comparable US dollar bonds.

Deutsche Bank: Deutsche Bank is an international issuer active in China's Panda bond market. The market, which involves yuan-denominated debt sold by foreign entities in mainland China, has seen increased activity due to favorable low borrowing costs.

Crédit Agricole: Crédit Agricole is mentioned as one of the international issuers active in the Chinese mainland's Panda bond market, which involves yuan-denominated debt sold by foreign entities. They are among over 90 international issuers, including sovereign and institutional entities, participating in this market driven by low borrowing costs in China.

Guojin Securities: Guojin Securities, a Chinese financial institution, recently published a report suggesting that yuan-denominated assets could become more appealing. This is due to signals from the US Federal Reserve indicating potential interest rate cuts. The report implies that for global investors, Panda bonds offer both yield and currency appreciation, enhancing China's allure as a financial haven.

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What Happened When

2005：: The first Panda bond was issued in the Chinese mainland.

2018：: Regulatory overhauls in China streamlined approval processes for foreign issuers and relaxed capital flow restrictions.

2022：: Further regulatory reforms in China streamlined approval processes for foreign issuers and relaxed capital flow restrictions.

July 2025：: Morgan Stanley raised 2 billion yuan via a five-year private placement bond, becoming the first U.S.-headquartered company to access China mainland’s domestic bond market.

By July 2025：: Issuance in the interbank Panda bond market reached 111.2 billion yuan in 2025, with more than half from foreign governments, development banks, and multinational firms.

July 2025：: Average yields on three- and five-year Panda bonds fell by more than 30 basis points in 2025, to under 2.2%.

July 2025：: At least 11 new Panda bonds totaling over 15 billion yuan are expected to hit the market, including offerings from BMW and the Asian Infrastructure Investment Bank; this is more than double the issuance from July 2024.

July 2025：: Hungary issued 4 billion yuan in three-year bonds, becoming the first sovereign to sell a five-year Panda bond; its total issuance in China reached 11 billion yuan.

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