# Panda Bonds

> Who can issue panda bonds, NAFMII vs exchange routes, approval timelines, the all-in issue budget, and how panda compares with dim sum.

Author: Maria Plotnikova — Lawyer, Family Office (https://wiki.private.law/en/authors/plotnikova)
Last modified: 2026-09-04T00:00:00.000Z
Canonical: https://wiki.private.law/en/panda-bonds
Topics: investments, banking
Jurisdictions: china
Functional tags: corporate-banking
Product tags: banking, investment
Semantic tags: corporate-banking, banking, investment, custom-consultation

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## Concept

A panda bond (熊猫债) is a bond denominated in onshore renminbi (CNY), issued by a non-resident of the PRC on the mainland market, governed by PRC law, with custody and settlement through CCDC or Shanghai Clearing House.

Four categories of non-resident may issue: sovereigns, multilateral development banks, financial institutions and non-financial enterprises. One route works in practice — the interbank market (CIBM) with registration at NAFMII, and PBoC approval for financial institutions. It carried **99.3% of volume** in January–July 2026 ([S&P China Ratings, 13 August 2026](https://www.spgchinaratings.cn/upload/20260813_pandabonds_CN.pdf)). A debut cycle runs 4–7 months; a follow-on tranche inside a live two-year registration takes 2–6 weeks. The debut budget is 0.5–0.8% of the amount raised, or 17–27 bp per annum on a three-year note. The three-year coupon for an investment-grade issuer in 2026 sits at 1.72–2.18%: Deutsche Bank priced at 1.72% on 29 May 2026 ([Deutsche Bank](https://www.db.com/news/detail/20260601-deutsche-bank-issues-second-panda-bond-in-2026-expanding-access-to-china-s-rmb-capital-markets?language_id=1)), Kazakhstan at 1.90% the same day ([AIFC](https://aifc.kz/news/kazakhstan-achieves-record-pricing-in-debut-panda-bond-issuance/)), with the top of the range at Samruk-Kazyna's 2.18% in April 2026.

What the news flow leaves out begins here. A 1.8% coupon is the price of renminbi, not the price of money. Swap the proceeds into dollars and the gap collapses: an offshore debt trader at a large Chinese bank puts the real post-hedge saving at roughly **10 basis points** ([The Paper, 6 April 2026](https://www.thepaper.cn/newsDetail_forward_32872867)), and for an emerging-market sovereign hedged renminbi comes out about **100 bp more expensive than the dollar** ([FDL Policy Note 33, March 2026](http://findevlab.org/wp-content/uploads/2026/03/FDL_Policy-Note-33_RMB-denominated-bonds_FINAL.docx-.pdf)).

Second: the 2026 record is measured off a falling base. 2024 closed at an all-time high of CNY 194.8 billion. 2025 delivered **CNY 183.56 billion** on Wind data ([Chinanews, 14 August 2026](https://www.chinanews.com.cn/cj/2026/08-14/10677446.shtml)) and only CNY 163.66 billion on Lianhe's ([Lianhe Ratings](https://www.lhratings.com/file/g14566fb8dc.pdf)) — minus 5.8% or minus 16% depending on the perimeter; over January–October 2025 the market ran 13.6% below the prior year ([S&P China Ratings, 7 November 2025](https://www.spgchinaratings.cn/upload/20251107_Pandabonds_CN_r.pdf)). That is where the "plus 90.3%" measured over January–May 2026 comes from ([SCMP, 8 June 2026](https://www.scmp.com/economy/china-economy/article/3356319/china-sees-record-panda-bond-issuance-2026-foreign-borrowers-pile)). Then there is scale: Hong Kong's dim sum market is materially larger than the panda market in 2026. Panda is the smaller channel of renminbi funding for non-residents, not the principal one.

This article holds the mainland debt perimeter in full. The price of renminbi money as such belongs to [lending in China](https://wiki.private.law/en/china-lending); dim sum as an instrument in its own right belongs to [Hong Kong](https://wiki.private.law/en/hong-kong-ipo); the mainland equity and exchange perimeter is in [Shanghai](https://wiki.private.law/en/shanghai-listing); a foreign investor's access to Chinese paper is in the [country hub](https://wiki.private.law/en/china-hub).

> 🍓 A panda bond is a way to raise renminbi from Chinese investors, not a way to borrow money cheaply. The headline saving of 230–260 bp against the dollar exists only up to the currency swap; after the swap around 10 bp remain for an investment-grade corporate borrower and a negative number for an emerging-market sovereign. The case is unarguable in exactly one configuration: when the renminbi raised is spent as renminbi.

## Panda, dim sum and renminbi paper issued at home

A panda bond is a non-resident's renminbi inside the PRC; a dim sum bond is a non-resident's renminbi in Hong Kong; a renminbi note placed by an issuer on its own domestic market is neither — panda status is set by the issuer's residence and the place of issue, not by the currency.

| Parameter | **Panda** (熊猫债) | **Dim sum** (点心债) | **Renminbi paper on a third-country market** |
| --- | --- | --- | --- |
| Issuer and currency | Non-resident of the PRC; onshore CNY, priced off the PBoC fixing | Non-resident of Hong Kong; offshore CNH, freely convertible | As a rule, a domestic issuer on its own market |
| Settlement | CCDC or Shanghai Clearing House | Euroclear / CMU | Local depository |
| Governing law | PRC law; a PRC legal adviser is mandatory (art. 24, NAFMII Guidelines) | English or Hong Kong law | Law of the place of issue |
| Admission | NAFMII registration valid two years, or PBoC approval; CSRC on exchange | None required; HKEX listing optional | Per the local regulator |
| Accounting | CAS or an equivalent recognised by the PRC Ministry of Finance, plus a mandatory reconciliation of differences | IFRS / US GAAP, no reconciliation | Local standards |
| Investor base | Chinese banks 39%, funds 37%, **foreign investors 15%** (H1 2026, [Far East Credit 远东资信, 7 August 2026](https://www.163.com/dy/article/L3O9MDKD05568W0A.html)) | International funds, private banks, Asian treasuries | Domestic base |
| Proceeds | Negative list plus consistency with the prospectus; outward transfer permitted since 1 January 2023 | Unrestricted | Per the prospectus |
| Tax | Non-resident interest income exempt from CIT and VAT until 31 December 2027 ([MoF and STA, 15 January 2026](https://www.chinanews.com.cn/cj/2026/01-15/10552609.shtml)) | Outside the PRC tax perimeter | Per the local regime |
| 2026 volume (to mid-August) | CNY 202.475 billion (at 13 August) | **CNY 683.04 billion** (at 14 August, [SCMP, 24 August 2026](https://www.scmp.com/business/banking-finance/article/3364976/yuan-hong-kong-dollar-bonds-surge-issuers-seek-cheaper-funding-amid-rising-us-costs)) | — |

The distinction has practical bite. Renminbi bonds placed by an issuer on its own domestic market — renminbi government paper, renminbi bonds of a domestic municipality, renminbi issues by domestic corporates — are neither panda nor dim sum: they open neither the Chinese nor the international investor base, they simply convert domestic savings into renminbi form. Moscow negotiated access to the panda market for more than ten years, never agreed acceptable terms and placed at home instead ([The Moscow Times, 22 May 2026](https://www.themoscowtimes.com/2026/05/22/russia-revives-yuan-debt-push-as-budget-gap-widens-and-demand-lags-a92819)) — the clearest available illustration of the sanctions filter described below, because nothing in the rulebook barred the issuer and the deal still never cleared the underwriter. The mirror case: a renminbi bond issued by a Chinese resident is ordinary domestic paper, even when foreigners buy it through Bond Connect.

## Economics: why a 1.8% coupon is not cheap money

The economics of an issue is the difference between the renminbi coupon and the cost of alternative funding in the currency the issuer actually spends, net of swap cost and the issue budget.

The weighted average coupon on panda issues in the first half of 2026 was **1.85%** (−8.75 bp y/y); three-year AAA paper priced at an average of **1.94%**, 30.42 bp below the same period of 2025 ([Far East Credit 远东资信, 7 August 2026](https://www.163.com/dy/article/L3O9MDKD05568W0A.html)). Dollar funding of comparable quality is quoted at SOFR plus 50–90 bp, or 4.15–4.45% ([The Paper, 6 April 2026](https://www.thepaper.cn/newsDetail_forward_32872867)). The gross gap is 230–260 bp, and that is the number circulated as "the saving". After the hedge almost nothing is left of it, and three independent sources say so.

| Source | Net saving after hedging | Wording |
| --- | --- | --- |
| Offshore debt trader at a large Chinese bank ([The Paper, 6 April 2026](https://www.thepaper.cn/newsDetail_forward_32872867)) | **≈ +10 bp** | "After currency hedging the actual saving is around 10 basis points"; the structure is described as the renminbi version of the yen carry trade |
| [FDL Policy Note 33, March 2026](http://findevlab.org/wp-content/uploads/2026/03/FDL_Policy-Note-33_RMB-denominated-bonds_FINAL.docx-.pdf) | **≈ −100 bp** for an EM sovereign | "A significant premium for issuing in RMB relative to USD, even when hedged, of around 100 basis points" |
| Xu Yan, CICC ([Caixin, 18 October 2025](https://www.caixinglobal.com/2025-10-18/panda-bonds-hit-record-as-policy-shift-drives-global-yuan-demand-102372897.html)) | around zero | As reported by Caixin: hedging costs can offset the yield advantage (the source paraphrases rather than quotes) |

The spread between those readings comes from the issuer's credit curve and the point of comparison — and it sits inside the source itself. The ≈100 bp figure is FDL's average conclusion from market swaps for an emerging-market sovereign; the Kenya arithmetic in the same note is a single case measured against Kenya's expensive eurobond curve: a panda swapped into dollars costs 4.65% against 6.15% on the eurobond, renminbi 150 bp cheaper. Swapped into Kenyan shillings the same trade costs 11.958% against 11.38% on domestic debt, dearer than money at home. For an investment-grade issuer the advantage over the dollar compresses to a handful of basis points, and the issue budget eats them.

The hedge is not always available either. FDL describes onshore CNY derivatives as a market with limited liquidity and short tenors: for maturities of five years and beyond the swap is expensive or simply absent, direct renminbi-to-EM-currency derivatives barely exist (the chain runs CNY → USD → local currency, paying two spreads), and onshore hedging is available only on the genuine-need principle (实需原则) through a Chinese financial institution. A natural renminbi hedge is rare: Zambia has roughly 15% of government revenue denominated in renminbi, and that is the exception.

Hence three configurations in which the gain comes from something other than the coupon. **The borrower who keeps the money in renminbi:** a multinational with production in the PRC (Volkswagen, BMW, Mercedes, BASF, Bayer, Henkel) does no swap at all and takes the full 230–260 bp — BASF's 2025 panda coupon was 2.28% against more than 5.5% on its dollar debt, and the self-use panda bond (自用熊猫债) structure works on top. Samuel Fischer, head of onshore DCM at Deutsche Bank in China, describes panda bonds moving "from a tactical option to a strategic component" of German issuers' funding ([Deutsche Bank, 10 July 2026](https://www.db.com/news/detail/20260710-why-german-issuers-are-turning-to-china-s-panda-bond-market-in-2026?language_id=1)). **The global bank:** Deutsche Bank, UBS, UOB, BNP Paribas, Barclays, Crédit Agricole and Morgan Stanley put the proceeds to work without conversion, and diversification buys an issuance window outside the dollar cycle. **The sovereign buying a relationship:** Yu Yongqiang of JunHe names Belt and Road participation and relations with the Chinese authorities as the motives ([law.asia, May 2026](https://law.asia/panda-bond-issuances-surges/)).

> 🧭 One question settles the choice: which currency will the proceeds be spent in. Spending renminbi inside the PRC — panda, and the gain is measured in hundreds of basis points. Renminbi needed outside the mainland and speed matters — dim sum: no registration, English law, a deeper market; that is the route Portugal took in April 2026. Dollars needed — a eurobond: after the swap the panda will not be cheaper, and it adds PRC governing law plus months of calendar.

## Two routes: the interbank CIBM and the exchanges

A panda bond is placed either on the interbank market supervised by the PBoC and the Ministry of Finance with registration at NAFMII, or on an exchange under CSRC oversight; only the first route is economically alive.

| Parameter | **Interbank (CIBM)** | **Exchange (SSE / SZSE)** |
| --- | --- | --- |
| Regulator | PBoC and the PRC Ministry of Finance; NAFMII as self-regulator | CSRC, processing by the exchange |
| Base act | Announcement PBoC/MoF No. 16 (2018), published 8 September 2018, effective 25 September 2018 ([Han Kun](https://www.hankunlaw.com/portal/article/index/cid/8/id/7449); [NAFMII Panda Bond Manual](https://www.nafmii.org.cn/englishnew/overseasparticipation/pandabond/resources/202407/P020240705534776009497.pdf)) | CSRC rules on corporate bonds |
| Instrument | Debt financing instruments (债务融资工具, DFI): SCP, CP, MTN, perpetual notes, ABN, green notes; private placement notes (定向工具, PPN) | Corporate bond (公司债券) |
| Admission regime | Registration (注册); a registration stays valid two years | Registration; a frequent issuer programme has been available since August 2022 |
| Financial test | No profit threshold for non-financial issuers | For a public offering, average distributable profit over three years must cover annual interest |
| Market share | ≈95% (2024) → **99.3%** (January–July 2026, [S&P China](https://www.spgchinaratings.cn/upload/20260813_pandabonds_CN.pdf)); 99.8% in H1 2026 per Far East Credit | ≈5% (2024) → **0.2–0.7%** (2026) |
| Who actually goes there | Sovereigns, MDBs, global banks, multinationals | Essentially only red chips: Bermuda 20.7%, Hong Kong 19.5%, Cayman 9.5% of incorporations (2025, [Lianhe](https://www.lhratings.com/file/g14566fb8dc.pdf)) |

The conclusion rarely stated out loud: the exchange route is dead for a genuine non-resident. The exchange share fell from roughly 5% in 2024 to 0.2–0.7% in 2026, and what remains is offshore-incorporated Chinese groups for whom the PRC is the home market in substance. A foreign sovereign, a development bank or a European industrial group has no alternative to the interbank market, and the mainland exchanges as a venue are covered in the material on [Shanghai](https://wiki.private.law/en/shanghai-listing). Inside the interbank market there is a second fork — a public DFI against private placement notes: PPNs go to a narrow circle of qualified investors with lighter disclosure and cost less to prepare, but they do not create a pricing benchmark for the next tranche, and the benchmark is precisely what earned Deutsche Bank 21 bp between its March and May 2026 issues on the bank's own estimate (by coupon, 23 bp on the three-year and 19 bp on the five-year).

## Who may issue

Four categories of non-resident have the right to issue, each with its own registration body and its own set of requirements.

| Category | Registration | Key requirements |
| --- | --- | --- |
| **Foreign sovereigns** | NAFMII | Track record of debt issuance and capacity to pay (art. 5, Guidelines) |
| **Multilateral development banks** | NAFMII | The same; plus separate NAFMII directives of January 2024 |
| **Foreign financial institutions** | **PBoC** | Paid-in capital of at least CNY 10 billion; corporate governance and risk management; **three consecutive profitable years** (art. 6) |
| **Foreign non-financial enterprises** | NAFMII | No capital threshold; the tiered classification applies |

**Tiered issuer classification (分层分类)** was introduced by the NAFMII Guidelines, effective 19 October 2023 ([NAFMII](https://www.nafmii.org.cn/zlgl/zlgz/zcfxl_1059/zcl/202310/t20231020_315969.html)). The mature offshore tier (境外成熟层) — listed on a major foreign exchange, aggregate global bond issuance over the past 36 months of at least the equivalent of CNY 10 billion, no defaults in 36 months — gets a single DFI registration **with no amount stated** and comments within three working days. The basic offshore tier (境外基础层) registers product by product with an amount stated, and gets a reply within five working days.

**Accounting and audit.** CAS is accepted, as are equivalents recognised by the PRC Ministry of Finance — EU, Hong Kong, UK and Swiss standards. Article 16 of the Guidelines requires disclosure of material differences between the standard applied and CAS together with a reconciliation, and that is the single biggest driver of a long preparation phase. Where CAS is used, the audit goes to a PRC firm holding a securities licence. A non-resident auditor is admitted under article 19: a valid licence in its home jurisdiction, at least five years of experience auditing publicly traded securities, a consent letter and a filing with the PRC Ministry of Finance **no later than 20 working days** before the submission, and annually thereafter ([audit in China](https://wiki.private.law/en/audit-china)).

**A rating is not required** on either the interbank market or the exchange — not since August 2021, when the PBoC removed mandatory rating on a pilot basis. In 2025, **70 of 114 tranches** priced unrated — 61.4% by count and 65.3% by issue volume; of the 44 rated tranches, 43 carried AAA and one AA+ ([Lianhe](https://www.lhratings.com/file/g14566fb8dc.pdf)). S&P China's sample covers a longer period and gives the same picture: over 2023 to October 2025, **57%** of panda bonds priced without an issue rating, and where an issue rating was present the issuer rating was AAA in **92%** of cases ([S&P China Ratings, 7 November 2025](https://www.spgchinaratings.cn/upload/20251107_Pandabonds_CN_r.pdf)). The national scale is not comparable with international scales: of the 77 issuers outstanding on 31 July 2026, 45 hold an international rating and 87% of those are investment grade — and domestically every one of them is AAA, while the six issuers whose international rating is speculative grade (BB+/Ba1 and below) hold domestic ratings in the AAA–AA+ range ([S&P China Ratings, 13 August 2026](https://www.spgchinaratings.cn/upload/20260813_pandabonds_CN.pdf)). The regulator has now said so directly: a NAFMII notice of **21 July 2026**, effective **1 August 2026**, requires agencies to publish a mapping of the national scale against international scales and bars acceptance of reports from agencies that do not ([Xinhua via QQ](https://news.qq.com/rain/a/20260721A0967V00)). The conclusion: a Chinese AAA is not an argument in a conversation with an international investor, and for a sub-investment-grade issuer the problem is solved by a development bank guarantee, not by a rating.

## Procedure and calendar

An issue is a sequence of seven steps in which registration takes weeks while the accounts and the legal package take months.

The lead underwriter can only be a Chinese bank or securities house, and under article 8 of the Guidelines at least one syndicate member must have a presence in the issuer's home country. Bank of China has ranked first in panda underwriting for **eleven consecutive years since 2014** ([Bank of China, 6 January 2026](https://www.boc.cn/english/enterprises/cb2/cbf/202601/t20260106_25639231.html)); then ICBC, CCB and CICC, and among foreign houses Deutsche Bank (China), HSBC (China), BNP Paribas (China) and UBS Securities. Add two legal advisers (the PRC one mandatory under article 24), an auditor, a depository, an investor-protection trustee (article 25) and, optionally, a rating agency.

1. **Preparation — 6 to 12 weeks:** mandate, due diligence, accounts and the CAS reconciliation, translation into simplified Chinese, legal opinions; in parallel, the non-resident auditor's filing with the PRC Ministry of Finance.
2. **NAFMII registration** (or PBoC approval). The package is submitted **only through the underwriter**. Comment letters come within three working days for the mature tier and five for the basic tier; the practical cycle including responses runs 4–10 weeks.
3. **Registration acceptance notice.** Valid for **two years** (article 9); inside that window tranches price without re-registration.
4. **Registration of the proceeds account**, with the bank's certificate issued.
5. **Roadshow and bookbuilding — 1 to 2 weeks.** Oversubscription runs 1.5x to 5x: Deutsche Bank drew CNY 8.66 billion of orders against a CNY 5.5 billion deal in March 2026, Pakistan was five times covered in May 2026, UBS more than three times in August 2026.
6. **Settlement, listing, secondary trading.**
7. **Post-filing:** the registration form is updated within **20 working days after the tranche closes**.
The calendar: **4 to 7 months for a debut issuer, 2 to 6 weeks for a follow-on tranche**. Volkswagen priced its fifth issue under its DFI programme on 21 May 2026 ([Clifford Chance](https://www.cliffordchance.com/news/news/2026/05/clifford-chance-advises-volkswagen-on-dual-tranche-rmb3-billion-panda-bond-issue-under-its-dfi-programme.html)), and Deutsche Bank came twice in 2026 less than three months apart. That is the argument for registering a programme rather than doing a single deal.

## Issue budget and the entry threshold

The budget is an underwriting fee tied to size plus a block of fixed costs for advisers, audit and infrastructure that does not scale with the deal — and therefore sets the entry threshold.

The tariff base is the schedule in the [ADB/ASEAN+3 Bond Market Guide for the PRC](https://asianbondsonline.adb.org/documents/abmg/abmf-prc-bmg2020-fees-taxation.pdf): underwriting with a **regulatory floor of 0.4%** (typically 0.4–0.6% for a corporate issuer, 0.15% for financial paper, 0.1% for government paper), CCDC registration at 0.6–1.15 bp by tenor (1.0–1.05 bp for one to five years), SHCH at 0.3–1.15 bp (around 1.0 bp for one to five years), payment servicing at 0.05 bp of the sum of coupon payments and redemption at CCDC and 0.3–0.5 bp of the issue amount charged once at SHCH (0.5 bp for paper longer than 180 days). Adviser fees are not regulated: a Chinese plus a foreign legal adviser for a debut runs CNY 2–5 million, and audit with reconciliation and translation another CNY 1–3 million.

**Debut issuer, CNY 2 billion for three years, interbank route, CCDC as depository** (midpoints of the ranges, estimate):

| Item | Basis | CNY million | Comment |
| --- | --- | --- | --- |
| Underwriting | 0.45% | **9.00** | Regulatory floor of 0.4% = 8.00 million; negotiated inside the 0.4–0.6% corridor |
| CCDC registration | 1.05 bp (one to five years) | **0.00** | 0.21 million on the schedule; **the CCDC draft of 27 July 2026** zeroes the fee from 1 September 2026 |
| Payment servicing | 0.05 bp of total payments | **0.00** | 0.01 million on the schedule; same draft, status — **public consultation** |
| Rating and surveillance | 0.015% of principal | 0.30 | Optional: 57–65% of tranches price unrated, depending on the perimeter |
| Legal advisers (PRC + foreign) | fixed | 3.50 | Range 2–5 million; the PRC adviser is mandatory |
| Audit, CAS reconciliation, translation | fixed | 2.00 | Range 1–3 million; plus the auditor's filing with the Ministry of Finance |
| Trustee (art. 25) | negotiated | 0.30 | Estimate |
| **All-in total** |   | **15.10** | **0.76% of size = 25.2 bp per annum** over three years; if the CCDC relief is not adopted — 15.32 million, 0.77%, 25.5 bp |

**A follow-on tranche of CNY 2 billion inside a live registration:** underwriting at the regulatory floor of 0.40% — 8.00 million; registration and payment servicing — 0.00 if the CCDC relief is adopted (0.22 otherwise); rating surveillance — 0.05; tranche-level legal work instead of a full package — 0.30; refreshed accounts and reconciliation — 0.20; trustee — 0.25. **Total CNY 8.80 million, or 0.44% of size — 14.7 bp per annum, 40% below the cost of a debut.** The saving comes not from a discount but from the two-year life of the registration.

**What is proposed to be waived from September 2026, and what it is worth.** CCDC has put out for public consultation a draft cancelling its issuance registration and payment servicing fees on panda bonds: the document was published on 27 July 2026 and the proposed relief window runs from 1 September 2026 to 31 December 2028 ([Yicai, 27 July 2026](https://www.yicai.com/brief/103293728.html); [SCMP, 28 July 2026](https://www.scmp.com/economy/china-economy/article/3362091/china-waive-panda-bond-fees-through-2028-bolster-global-yuan-debt-market)). CCDC had published no final notice as at 4 September 2026, so the budget above assumes the relief applies and carries the price of its absence alongside. On a three-year CNY 2 billion deal that is CNY 0.22 million — **1.1 bp of size, 0.37 bp per annum, roughly 1.5% of the budget**: underwriting at the regulatory floor is thirty-six times the fee being waived. One consequence is concrete, though — **the choice of depository becomes a priced decision**: SHCH has announced no equivalent relief, and on its schedule the same deal would pay around CNY 0.30 million (1.5 bp of size) against zero at CCDC (calculated on the ADB/ASEAN+3 schedule, estimate).

**The entry threshold.** There is no regulatory minimum size; the threshold falls out of the cost structure. A debut issuer's fixed block — legal advisers, audit and reconciliation, trustee, rating — is CNY 6.1 million and is independent of deal size; the variable part is 0.45%.

| Size, CNY million | Fixed block | Underwriting at 0.45% | All-in, % of size | Bp per annum (3 years) |
| --- | --- | --- | --- | --- |
| 500 | 6.10 | 2.25 | **1.67%** | 55.7 |
| 1,000 | 6.10 | 4.50 | 1.06% | 35.3 |
| 1,500 | 6.10 | 6.75 | 0.86% | 28.6 |
| **2,000** | 6.10 | 9.00 | **0.76%** | **25.2** |
| 3,000 | 6.10 | 13.50 | 0.65% | 21.8 |
| 5,000 | 6.10 | 22.50 | 0.57% | 19.1 |

The curve approaches 0.45% asymptotically — 15 bp per annum, the price of underwriting, below which nothing goes. The fixed block adds 40 bp per annum over that asymptote at CNY 500 million, 20 bp at CNY 1 billion and 10.2 bp at CNY 2 billion; beyond that each additional CNY 500 million buys less than 4 bp. **The practical debut threshold is CNY 1.5–2 billion**, and below CNY 1 billion the load does not pay for itself. The market has arrived at the same point empirically: the median 2026 issue is around CNY 1.8 billion, a typical corporate tranche runs CNY 2–5.5 billion, and the smallest sovereign deal was CNY 1.75 billion (Pakistan, 15 May 2026, with a partial AIIB guarantee). **For a follow-on tranche the threshold drops to roughly CNY 500 million:** the fixed block shrinks to CNY 0.8 million, and all-in cost at that size is 0.56%, or 18.7 bp per annum.

> ⚙️ The budget has to be compared with the net rate gap, not the gross one. A debut issuer pays 25 bp per annum of issuance cost against a post-swap saving of about 10 bp — meaning a swapping debut issuer is under water before the first coupon. Run the same arithmetic for a repeat issuer keeping renminbi as renminbi: 14.7 bp of cost against 230–260 bp of saving. The line between worthwhile and not lies in two variables — the currency the money is spent in, and whether a live registration exists — never in the coupon.

## Use of proceeds and repatriation

Proceeds land in a dedicated account and may be transferred abroad, invested inside the PRC or on-lent to Chinese residents — provided the use matches the prospectus and clears the negative list.

**The governing act has to be named precisely, because the press names it wrongly.** The rule in force is 《中国人民银行 国家外汇管理局关于境外机构境内发行债券资金管理有关事宜的通知》, **Yinfa 2022/272 (银发〔2022〕272号), issued 23 November 2022, effective 1 January 2023** ([SAFE](https://www.safe.gov.cn/dalian/2022/1206/1735.html); [PBoC](https://www.pbc.gov.cn/tiaofasi/144941/3581332/4731493/index.html)); it repealed the 2014 and 2016 notices. The formulation "repatriation allowed since January 2022" with a reference to Announcement No. 2 (2022) is inaccurate: what appeared in December 2021 was only a consultation draft. More often still it is confused with Announcement No. 4 (2022) (27 May 2022, effective 30 June 2022) — but that one governs access for foreign institutional investors, not issuers' proceeds ([CSRC](http://www.csrc.gov.cn/csrc/c100028/c3046596/content.shtml)).

**The dedicated account (募集资金专户)** is opened before pricing, in renminbi and, where needed, in foreign currency under the NRA regime, against the bank's registration certificate; every movement is tied to the purpose stated in the prospectus. Permitted outflows: transfer abroad, or purchase of foreign currency followed by transfer; payment of principal, interest and taxes; loans to Chinese residents; investment inside the PRC under FDI rules with repatriation of returns; transfers to the issuer's other accounts. Article V allows both taking the money out and leaving it in the country; article VI permits currency derivatives only through a Chinese financial institution and only on the genuine-need principle. **The negative list** shuts out land and real estate, shares, equity interests and futures, asset management and financial investment, non-operating projects, repayment of loans on speculative projects, budget-financed projects and increases in public debt; a change of purpose must be disclosed no later than five working days in advance (art. 12 of the Guidelines).

**The self-use panda bond (自用熊猫债) structure** is the main economic motive for German industrial groups: under article 4 of the PBoC's 2017 notice on macro-prudential management of cross-border financing, a loan extended by a foreign parent to its Chinese subsidiary out of panda proceeds **is not counted in the subsidiary's external debt** and does not consume its cross-border borrowing quota. Volkswagen, BMW, Mercedes, BASF, Bayer and Henkel use it; the operating-structure requirements sit in the material on [a company in the PRC](https://wiki.private.law/en/company-china).

**The honest number: roughly 30% of 2024 panda proceeds went offshore** on Standard Chartered's estimate ([Caixin, 18 October 2025](https://www.caixinglobal.com/2025-10-18/panda-bonds-hit-record-as-policy-shift-drives-global-yuan-demand-102372897.html)) — the remaining 70% or so was never remitted abroad. The strategies are polar: Hungary (July 2025) converted its proceeds into euros, Indonesia (July 2026) kept 100% in renminbi on offshore accounts, Pakistan (May 2026) directed the money to domestic projects, and German groups fund their Chinese operations.

> ⚠️ FDL calls the regime "conditional flexibility rather than free convertibility" and separately notes that this is not full capital account liberalisation: the prospectus binds the issuer legally, movements through the dedicated account are monitored, and converting a large amount depends on regulatory discretion. Yinfa 2022/272 is an administrative easing, not a statutory guarantee, and it can be adjusted by the same procedure that adopted it. Building deal economics on the unimpeded exit of the full amount is not defensible.

## The market in numbers and who buys

The market grew roughly 74% year on year in 2026 and passed CNY 200 billion, but 2025 was a falling year for it and demand is almost entirely Chinese.

| Period | Volume | Basis and source |
| --- | --- | --- |
| **2024** | **CNY 194.8 billion**, 110 issues, 44 issuers — a record | [S&P China Ratings, 25 August 2025](https://www.spgchinaratings.cn/upload/20250825_panda-bonds-overview-en-2-.pdf) |
| **2025** | **CNY 183.56 billion** (−5.8%) or **CNY 163.66 billion**, 114 tranches (−16%) | Wind via [Chinanews, 14 August 2026](https://www.chinanews.com.cn/cj/2026/08-14/10677446.shtml) / [Lianhe](https://www.lhratings.com/file/g14566fb8dc.pdf); the perimeters differ by CNY 20 billion (11%) |
| 2025, January–October | **−13.6% y/y** | [S&P China Ratings, 7 November 2025](https://www.spgchinaratings.cn/upload/20251107_Pandabonds_CN_r.pdf) |
| H1 2026 | CNY 160.03 billion, 89 tranches, 42 issuers (+68.98%) | [Far East Credit 远东资信, 7 August 2026](https://www.163.com/dy/article/L3O9MDKD05568W0A.html) |
| **2026 to 13 August** | **CNY 202.475 billion (+73.57% y/y)** | Wind via [Chinanews, 14 August 2026](https://www.chinanews.com.cn/cj/2026/08-14/10677446.shtml) — above both 2025 and the record 2024 |

Three qualifications change the reading. First, a large part of the 2026 increase is a low-base effect. Second, **the dim sum market is 2.2–3.4 times the size of the panda market** — CNY 358 billion against CNY 160 billion in H1 2026 ([Goldman Sachs via SCMP, 10 August 2026](https://www.scmp.com/economy/china-economy/article/3363498/panda-bond-boom-offers-historic-yuan-chance-cheap-funding-not-enough-goldman-sachs)) and CNY 683.04 billion against CNY 202 billion by mid-August. Third, and this one is structural: the share of genuinely foreign issuers, as opposed to offshore-incorporated Chinese groups, has risen from 27% (2023) to 32% (2024), 39% (2025) and **50% over January–July 2026**; outstandings stood at **CNY 506.4 billion on 31 July 2026**, roughly 36% above a year earlier ([S&P China Ratings, 13 August 2026](https://www.spgchinaratings.cn/upload/20260813_pandabonds_CN.pdf)). On first-half volume Far East Credit puts the genuinely foreign share at about 54% — ahead of issuers with Chinese roots for the first time.

Demand, though, is domestic. Panda bonds trade on the interbank market, which a non-resident reaches through Bond Connect, CIBM Direct and QFII/RQFII, but the constraint is not access — it is mandate. Panda bonds are not in the global indices, so passive money goes past them into government bonds and policy bank paper, while an active manager runs into a rating scale that does not map. Hence 15% foreign participation in H1 2026, and 0.6% in Slovenia's deal. The pricing anchor: FDL puts the premium of a sovereign panda over Chinese government bonds at around 100 bp, yet investment-grade issuers now price inside that — Kazakhstan took 1.90% with CGB yields near 1.4%; for banks the benchmark is the China Development Bank curve. One demand driver is fiscal: the exemption of non-resident interest income from CIT and VAT was extended on 15 January 2026 to 31 December 2027, so for a bond maturing after that date the regime is not guaranteed for the full life of the paper (withholding mechanics sit in the material on [withholding tax](https://wiki.private.law/en/withholding-tax)).

## Deals of 2025–2026

Below are the issues that set the market's pricing reference, with two corrections to deals that circulating lists record wrongly.

| Issuer | Date | CNY billion | Tenor | Coupon | Note |
| --- | --- | --- | --- | --- | --- |
| Hungary | July 2025 | 5.0 | — | — | Proceeds taken offshore and converted into euros |
| BASF | 2025 | — | — | **2.28%** | Against more than 5.5% on its dollar debt |
| **Deutsche Bank** | 9 March 2026 | **5.5** | 3 and 5 years | **1.95% / 2.13%** | Largest issue by a foreign bank; orders of CNY 8.66 billion ([DB](https://www.db.com/news/detail/20260309-deutsche-bank-successfully-issues-record-breaking-5-5-billion-renminbi-panda-bond?language_id=1)) |
| UOB | 18 March 2026 | 5.0 | 3 years | **1.83%** | [FinanceAsia](https://www.financeasia.com/article/uob-prices-rmb5bn-panda-bond-db-and-bnp-paribas-also-issue-bonds-in-march/507428) |
| BNP Paribas | March 2026 | 5.0 | 5 years | **2.05%** | Against ≈5% on its dollar debt |
| **Slovenia** | 30 March 2026 | **4.0** | 3 years | **1.89%** | Largest sovereign debut in panda history; mainland 93.4%, **foreign investors 0.6%** ([gov.si](https://www.gov.si/en/news/2026-03-30-slovenia-expands-global-funding-footprint-with-successful-inaugural-renminbi-denominated-panda-bond-offering/)) |
| Samruk-Kazyna | April 2026 | 3.0 (≈ $438.9 million) | 3 years | **2.18%** | First Central Asian issuer |
| Pakistan | 15 May 2026 | 1.75 (≈ $258 million) | — | — | Sustainable bond; AIIB guarantee; five times oversubscribed ([AIIB](https://www.aiib.org/en/news-events/news/2026/aiib-adb-support-panda-bond-issuance-for-green-projects-pakistan.html)) |
| Volkswagen | 21 May 2026 | 3.0 (2 + 1) | 3 and 5 years | — | Fifth issue under the DFI programme; issuer VW International Finance N.V. |
| **Kazakhstan, Ministry of Finance** | 29 May 2026 | **3.4** | 3 years | **1.90%** | Sovereign debut; twice oversubscribed; CICC as lead ([AIFC](https://aifc.kz/news/kazakhstan-achieves-record-pricing-in-debut-panda-bond-issuance/)) |
| **Deutsche Bank** | 29 May 2026 | 3.5 (2.5 + 1.0) | 3 and 5 years | **1.72% / 1.94%** | 21 bp inside the March issue on the bank's own estimate; by coupon, 23 bp on the three-year and 19 bp on the five-year ([DB](https://www.db.com/news/detail/20260601-deutsche-bank-issues-second-panda-bond-in-2026-expanding-access-to-china-s-rmb-capital-markets?language_id=1)) |
| Indonesia | July 2026 | 7.0 (5.6 + 1.4) | 3 and 5 years | — | Orders of CNY 17 billion (2.4x); programme of up to CNY 30 billion; 100% taken offshore |
| **UBS** | 27 August 2026 | 2.0 | 5 years | **1.78%** | Record low coupon and the tightest spread to CDB among five-year pandas from foreign banks ([UBS](https://www.ubs.com/global/en/media/display-page-ndp/en-20260827-panda-bond.html)) |
| Brazil | announced 25–26 June 2026 | up to 5.0 | — | — | **Programme announced; no issue as of mid-August** ([ecns, 14 August 2026](https://www.ecns.cn/cns-wire/2026-08-14/detail-ihfifqmx7363542.shtml)) |

**Portugal issued a dim sum bond in April 2026, not a panda** — an eight-year note of roughly €250 million equivalent at a coupon of 1.77% ([BOFIT, 26 June 2026](https://www.bofit.fi/en/monitoring/weekly/2026/vw202626_2/)); its ten-year euro paper was yielding around 3.4% at the time. That deal appears regularly, and wrongly, in lists of sovereign panda issues. The second correction is Brazil: the programme was announced in June 2026, and no bond has been placed.

## What changed in 2024–2026

The base act, Announcement No. 16 (2018), was not structurally revised in this period; what moved was the calibration — frameworks for sovereigns, the green perimeter, the tax exemption, rating discipline and fees.

| Date | Body | Change |
| --- | --- | --- |
| January 2024 | NAFMII | Directives for sovereign issuers and development institutions |
| February 2025 | NAFMII | Framework issuance (框架发行): an issuer's international green bond framework may be used, and ICMA GBP principles are recognised |
| May 2025 | NAFMII | Support for science and technology innovation bonds (科创债) |
| July 2025 | NDRC and six agencies | A green channel for foreign companies reinvesting proceeds inside the PRC |
| **15 January 2026** | MoF and STA | Exemption of non-resident interest income from CIT and VAT extended to cover **1 January 2026 – 31 December 2027** ([Chinanews](https://www.chinanews.com.cn/cj/2026/01-15/10552609.shtml)) |
| May 2026 | Shanghai Municipal Government | Panda bonds written into the Shanghai Global Asset Management Hub strategy |
| **21 July 2026** | NAFMII | Notice on panda bond ratings, effective **1 August 2026**: agencies must publish a mapping of the national scale against international scales, and reports from non-compliant agencies are not accepted ([Xinhua via QQ](https://news.qq.com/rain/a/20260721A0967V00)) |
| **27 July 2026 (draft)** | CCDC | Draft cancelling issuance registration and payment servicing fees on panda bonds; proposed window 1 September 2026 – 31 December 2028, out for public consultation ([Yicai](https://www.yicai.com/brief/103293728.html); [SCMP](https://www.scmp.com/economy/china-economy/article/3362091/china-waive-panda-bond-fees-through-2028-bolster-global-yuan-debt-market)) |

## Risks and constraints

The risks sit not in the issuer's credit quality but in the currency transformation, the administrative nature of the approvals and the narrowness of the investor base.

1. **Currency risk and hedging cost — the primary one.** The hedge consumes between 95% and more than 100% of the nominal saving; for tenors of five years and beyond the onshore swap is expensive or unavailable. Forward premium mechanics sit in the material on [lending in China](https://wiki.private.law/en/china-lending).
2. **Risk that repatriation rules change.** Yu Yongqiang of JunHe names a tightening of cross-border controls as one of two factors capable of collapsing demand. A deal whose economics rest on taking the whole amount out rests on practice, not on a rule.
3. **The investor base is narrow and domestic.** H1 2026: banks 39%, funds 37%, **foreign investors 15%, down 3.8 percentage points**; Slovenia placed 0.6% abroad. A panda bond gives access to Chinese capital, not to international capital through a Chinese venue.
4. **There is effectively no appetite for sub-investment-grade risk** — FDL calls it "extremely limited". Hence the necessity of guarantees: AIIB for Pakistan (2026), AIIB and AfDB for Egypt (2023), at annual guarantee fees of 50 and 80 bp ([FDL Policy Note 33, March 2026](http://findevlab.org/wp-content/uploads/2026/03/FDL_Policy-Note-33_RMB-denominated-bonds_FINAL.docx-.pdf)) that stack on top of the coupon.
5. **Secondary market liquidity.** FDL puts average monthly panda turnover at around CNY 30 billion in 2023 and above CNY 50 billion in 2024, against roughly $110 billion a month in the EM sovereign eurobond secondary market — at about 7.1 CNY to the dollar, some fifteen times smaller.
6. **Rating inflation.** On Lianhe's 2025 perimeter 65.3% of volume is unrated and 43 of the 44 rated tranches carry AAA; on S&P China's 2023 to October 2025 sample 57% of placements carry no issue rating and, where one is present, the issuer rating is AAA in 92% of cases. Six panda issuers whose international rating is speculative grade are rated AAA to AA+ domestically. The regulator acknowledged the problem in the NAFMII notice of 21 July 2026.
7. **The sanctions filter.** There is no formal filter and the practical one is absolute: the lead underwriter must be a first-tier Chinese bank or securities house, and every institution at that tier observes dollar compliance. Moscow spent more than ten years negotiating access and never agreed acceptable terms, ending up placing renminbi paper domestically. Screening practice sits in the material on [sanctions compliance](https://wiki.private.law/en/sanctions-screening).
8. **PRC governing law**, disputes heard in the PRC, no English-law protections for the holder.
9. **Operating requirements.** Disclosure in simplified Chinese only; reconciliation of differences with CAS; the non-resident auditor's filing with the PRC Ministry of Finance; disclosure of material events within seven working days; update of the registration form within 20 working days after a tranche closes.
## Q/A

### How does a panda bond differ from a dim sum bond?

By currency, jurisdiction and governing law: a panda bond is onshore renminbi on the PRC mainland market under PRC law with settlement through CCDC or Shanghai Clearing House; a dim sum bond is offshore renminbi in Hong Kong under English or Hong Kong law through Euroclear or CMU. A panda requires NAFMII registration, accounts under CAS or a recognised equivalent with a reconciliation of differences, and a PRC legal adviser; a dim sum requires neither registration nor reconciliation. A panda opens the Chinese investor base and a dim sum the international one; the dim sum instrument itself is covered in the material on [Hong Kong](https://wiki.private.law/en/hong-kong-ipo).

### Are domestic renminbi government bonds panda bonds?

No: panda status is determined by the place of issue and the issuer's residence, not by the currency. Renminbi government and corporate bonds placed by an issuer on its own domestic market through a local depository give access to neither Chinese nor international capital — they convert domestic savings into renminbi form. Moscow negotiated access to the panda market specifically for more than ten years, never agreed acceptable terms, and placed renminbi paper at home instead.

### Can a Russian company issue a panda bond?

There is no formal prohibition, and in practice the answer is no. Neither Announcement No. 16 (2018) nor the NAFMII Guidelines restrict issuance by nationality, and a non-financial issuer faces no capital threshold. The barrier lies elsewhere: the package is filed only through a lead underwriter, which can only be a Chinese bank or securities house, and every institution at that tier observes dollar sanctions compliance and screens out the Russian nexus at the door. Moscow could not agree acceptable terms across more than ten years of trying.

### What does it cost to issue a panda bond?

A debut issuer pays 0.5–0.8% of the amount raised, or 17–27 bp per annum on a three-year note; a repeat issuer inside a live registration pays around 0.44%, or 14.7 bp per annum. The dominant item is underwriting at 0.4–0.6% against a regulatory floor of 0.4%; the debut issuer's fixed block — legal advisers CNY 2–5 million, audit and CAS reconciliation CNY 1–3 million, trustee, rating — is about CNY 6.1 million and does not depend on deal size. CCDC fees are proposed to be waived from 1 September 2026 through the end of 2028, but the draft is still out for public consultation and the fees are worth only about 1.1 bp of size, roughly 1.5% of the budget.

### Is a rating required for a panda issue?

No — not since August 2021, when the PBoC removed mandatory rating on a pilot basis. In 2025, 70 of 114 tranches priced unrated on Lianhe's data — 61.4% by count and 65.3% by volume; on S&P China's 2023 to October 2025 sample, 57% of placements carried no issue rating. A Chinese rating carries limited information: Lianhe recorded AAA on 43 of the 44 rated tranches, and on S&P China's data the issuer rating is AAA for 92% of those whose issues were rated; the scale is compressed at the top and does not map to international scales — NAFMII acknowledged this in its notice of 21 July 2026, requiring agencies to publish a scale mapping from 1 August 2026. For a sub-investment-grade issuer the problem is solved by a development bank guarantee, not by a rating.

### Can the renminbi raised be taken out of China?

Yes, outward transfer has been permitted since 1 January 2023 under notice Yinfa 2022/272 of 23 November 2022 — but this is conditional flexibility, not free convertibility. Proceeds land in a dedicated account, movements through it are monitored, and use must match the prospectus and clear the negative list, which shuts out real estate, equity instruments and futures, asset management, non-operating projects and increases in public debt. In fact about 30% of 2024 issuance proceeds went offshore. The formulation "permitted since January 2022" with a reference to Announcement No. 2 (2022) is wrong.

### How long does an issue take?

Four to seven months for a debut issuer, two to six weeks for a follow-on tranche inside a live registration. Preparation is the long pole: 6–12 weeks for due diligence, accounts and the CAS reconciliation, translation into simplified Chinese and legal opinions, plus the non-resident auditor's filing with the PRC Ministry of Finance 20 working days before submission. Registration is formally fast — comments within three working days for the mature tier and five for the basic tier — but the practical cycle including responses runs 4–10 weeks. A registration stays valid for two years.

> 🍓 A panda bond is not cheap money, it is cheap renminbi, and the distance between those two phrases is worth about 250 basis points. Coupons of 1.72–2.18% are set against dollar funding at 4.15–4.45% before the currency swap; after the swap an investment-grade corporate borrower is left with roughly 10 bp, and an emerging-market sovereign finds hedged renminbi about 100 bp dearer than the dollar — against issuance costs of 25 bp per annum for a debut issuer and 14.7 bp for a repeat one. The instrument works for three types of issuer: the one spending the proceeds inside the PRC and never swapping, the global bank with a renminbi balance sheet, and the sovereign buying a relationship rather than basis points. Everyone else is better served by reading the market for what its size says it is: the junior channel of renminbi funding, smaller by volume than Hong Kong's dim sum market, with foreign demand at 15% and falling, and a 2026 record measured off a declining 2025.

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## Factual claims

- A panda bond (熊猫债) is a bond denominated in onshore renminbi (CNY), issued by a non-resident of the PRC on the mainland market, governed by PRC law, with custody and settlement through CCDC or Shanghai Clearing House.
- This article holds the mainland debt perimeter in full.
- The weighted average coupon on panda issues in the first half of 2026 was 1.85% (−8.75 bp y/y); three-year AAA paper priced at an average of 1.94%, 30.42 bp below the same period of 2025 (Far East Credit 远东资信, 7 August 2026).
- Tiered issuer classification (分层分类) was introduced by the NAFMII Guidelines, effective 19 October 2023 (NAFMII).
- A rating is not required on either the interbank market or the exchange — not since August 2021, when the PBoC removed mandatory rating on a pilot basis.
- The lead underwriter can only be a Chinese bank or securities house, and under article 8 of the Guidelines at least one syndicate member must have a presence in the issuer's home country.
- The calendar: 4 to 7 months for a debut issuer, 2 to 6 weeks for a follow-on tranche.
- Debut issuer, CNY 2 billion for three years, interbank route, CCDC as depository (midpoints of the ranges, estimate):

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