Panda Bonds Hit Record as Policy Shift Drives Global Yuan Demand
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Issuance of yuan-denominated bonds by foreign entities reached a record 194.8 billion yuan ($27 billion) in 2024
China’s panda bond market — onshore debt issued by foreign entities in yuan — is experiencing a historic surge, fueled by a mix of low interest rates and regulatory reforms that now allow foreign issuers to use the proceeds globally.
Issuance of yuan-denominated bonds by foreign entities reached a record 194.8 billion yuan ($23.5 billion) in 2024, according to S&P Global Ratings China. Momentum has remained strong in 2025, with 137.3 billion yuan raised through the first three quarters.
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- Panda bond issuance by foreign entities hit a record 194.8 billion yuan ($23.5 billion) in 2024, with 137.3 billion yuan raised in the first three quarters of 2025.
- Market reforms, especially the 2022 rule allowing offshore use of proceeds, have driven growth and boosted foreign investor confidence.
- The investor base has diversified beyond state-owned banks, increasing market liquidity and globalizing the yuan’s use.
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Who’s Who
- Mercedes-Benz
- Mercedes-Benz is one of the multinational companies that have entered the Chinese panda bond market. This market, which allows foreign entities to issue yuan-denominated debt, has seen a surge in activity. Mercedes-Benz's participation highlights the market's diversification beyond development banks and sovereign issuers.
- BMW
- BMW is a multinational company that has issued onshore debt in yuan, known as a panda bond. This indicates BMW's participation in the growing panda bond market in China, which has diversified beyond development banks to include sovereign issuers and other multinational corporations.
- Morgan Stanley
- Morgan Stanley became the first U.S.-based firm to issue a panda bond. This milestone occurred in July and highlights the growing diversification of the panda bond market, which now includes multinational corporations.
- S&P Global Ratings China
- S&P Global Ratings China is cited in the article as providing data on the panda bond market. According to them, issuance of yuan-denominated bonds by foreign entities reached a record of 194.8 billion yuan ($23.5 billion) in 2024. Wang Lei, their director of credit research and technology, explained during an October 15 seminar that the yield on Chinese government bonds falling below U.S. Treasurys in April 2022 created an attractive arbitrage opportunity.
- Standard Chartered Bank (China)
- Standard Chartered Bank (China)'s capital markets unit, represented by executive director Lai Haisu, highlights a crucial 2022 policy change. This reform, allowing foreign issuers to remit panda bond proceeds offshore, significantly boosted foreign investor confidence. Lai notes this policy's importance now outweighs interest rate differentials in issuance decisions, enabling yuan financing for global operations, with roughly 30% of 2024 proceeds deployed offshore.
- China International Capital Corp.
- Xu Yan, research head at China International Capital Corp. (CICC), mentioned that hedging costs can negate yield differences, leading firms to prioritize overall financing terms over just coupon rates when considering panda bonds.
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What Happened When
- January 2022：
- The People's Bank of China and the State Administration of Foreign Exchange issued a policy clarifying that panda bond proceeds can be either retained domestically or moved overseas.
- April 2022：
- The yield on Chinese government bonds fell below that of U.S. Treasurys, creating an attractive arbitrage opportunity.
- 2024：
- Yuan-denominated bond issuance by foreign entities reached a record 194.8 billion yuan ($23.5 billion).
- By July 2025：
- Morgan Stanley became the first U.S.-based firm to issue a panda bond.
- Through Q3 2025：
- A total of 137.3 billion yuan was raised in panda bond issuance by foreign entities.
- As of 2025：
- Regulatory reforms allowing global use of panda bond proceeds outweigh interest rate considerations in most issuance decisions.
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