Growth on horizon as panda bonds attract new investors around the globe

The panda bond market, in which overseas institutions issue renminbi bonds in China's onshore market, is poised to attract new issuers. On July 22, the Bank of China, as the lead underwriter and lead book runner, assisted Hungary in issuing 5 billion yuan ($698 million) of panda bonds in the Chinese interbank market. This issuance is the largest single sovereign panda bond in the panda bond market and the first five-year sovereign panda bond.

The bond is divided into two tranches: a three-year tranche of 4 billion yuan with a coupon rate of 2.5 percent and a five-year tranche of 1 billion yuan with a coupon rate of 2.9 percent. The issuance marks the deepening financial cooperation between China and Hungary and is of significance for expanding the panda bond market and attracting international issuers, BOC said.

Hungary is the first European country to sign a Belt and Road Initiative cooperation document with China and the partnership between China and Hungary in areas such as trade, finance and green energy has continued to deepen in recent years. In 2017, with the assistance of BOC, Hungary issued its first Bond Connect sovereign panda bond, becoming one of the first batch of Central and Eastern European issuers to enter the Chinese bond market. With cumulative issuance reaching 11 billion yuan, it marks the largest sovereign panda bond issuer in terms of cumulative issuance size and outstanding bond volume.

The Panda Bond is an RMB-denominated bond from a non-Chinese issuer, which is sold on the Chinese mainland. BOC, as the lead underwriter, recently assisted Morgan Stanley in the targeted issuance of 2 billion yuan of five-year panda bonds in the Chinese interbank bond market. This issuance is the first panda bond issued by a company headquartered in the United States. It has attracted subscriptions from a diverse range of investors, becoming an example of high-quality assets for interbank market investors.

As one of China's largest bond underwriters, BOC has been relying on its global bond underwriting and distribution network to serve various entities in issuing multi-currency bonds in domestic and international markets.

As of the end of June, BOC has assisted more than 70 foreign issuers in issuing nearly 300 panda bonds, with a total financing amount exceeding 570 billion yuan.

On Nov 24, 2022, Mercedes-Benz Financial Services issued the first green panda bond in the Chinese interbank market, with an issuance size of 500 million yuan, a term of two years and a coupon rate of 2.9 percent. This is the first green bond issued by Mercedes-Benz outside the European market, and the company is also the first automotive company to issue green panda bonds in China.

In Africa, as the lead underwriter and lead book runner, BOC assisted Egypt in issuing 3.5 billion yuan of sustainable panda bonds in 2023, achieving a breakthrough in panda bonds issuance in Africa. This is also the first sustainable sovereign panda bond and the first sovereign panda bond with a guarantee structure. Since the beginning of 2025, BOC, as the lead underwriter and lead book runner, assisted the African Export-Import Bank in issuing 2.2 billion yuan of panda bonds, achieving the first issuance breakthrough for a multilateral development institution in Africa.

On Nov 14, 2024, Suzano International Finance B.V. issued 1.2 billion yuan of green panda bonds in the Chinese interbank bond market, with a term of three years. This bond issuance is Suzano International Finance B.V.'s first issuance of RMB panda bonds in the Chinese interbank bond market, and it is also the first panda bond issued in South America.

To date, the cumulative issuance of panda bonds has exceeded 1 trillion yuan, becoming a key force for serving high-level opening-up of China. It has enriched the diversified financing systems related to the BRI and attracted international issuers to participate in its regular domestic issuance. As a key participant in the capital market, BOC said it will continue to leverage its global service network and cross-border business advantages to contribute to the opening-up of financial markets.