China hits record panda bond issuance in 2024, with analysts bullish for 2025

With more yuan-denominated panda bonds issued last year than any other, analysts expect even bigger numbers in 2025

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The New Development Bank, a multilateral development bank based in Shanghai, was the largest single issuer of China’s panda bonds in 2024. Photo: Reuters

Published: 8:00am, 4 Jan 2025

The issuance of “panda bonds” – yuan-denominated debt securities from overseas institutions operating in China – hit a record high in 2024, bolstered by lower funding costs and heightened efforts from Beijing to expand use of the currency.

Analysts expect even more growth this year, given the country’s need to shore up its economy and a long-term campaign to widen adoption of the yuan for international settlements.

China saw 109 issuances of panda bonds last year at a volume of 194.8 billion yuan (US$26.7 billion) according to Wind, a Chinese financial data provider. This marked a 16 per cent increase in the number of issuances and a 26 per cent year-on-year rise in value.

“The yield differential between China and the world is the primary driver, which is also supported by the previous change in using proceeds for repatriation,” said Gary Ng, a senior economist at Natixis.

“In addition, more sovereign issuers seek to diversify their forex funding exposure.”

To stimulate market liquidity, the People’s Bank of China made cuts to interest rates and reduced the reserve requirement ratio last year, which in turn helped lower borrowing costs for issuers.