The craze for Panda bonds is surging: A new trend in RMB financing, showcasing c
Why is the Panda Bond so Popular?
It's not an overnight sensation, the rise in popularity of the Panda Bond. Look at it this way, since the beginning of this year, the issuance of Panda Bonds has been like a rocket, shooting up rapidly. According to the Wind data compiled by our Securities Daily reporter, as of September 9th, 81 Panda Bonds have been issued this year, with a total issuance amount of 142.7 billion yuan, which is a whopping 25% increase compared to the same period last year! What's behind these numbers?
Firstly, we have to talk about the low-cost advantage of RMB financing. When compared to developed countries, the issuance interest rates of our Panda Bonds are synonymous with good value for money. Shi Lei, a member of the Listed Companies Professional Committee of the Central Committee of the China Democratic National Construction Association, has said that this low-cost advantage is the major draw for foreign issuers to issue Panda Bonds.
Moreover, our country has made significant efforts to welcome these foreign friends to issue bonds. Policy optimizations have been introduced one after another, such as unifying the fund management rules of the interbank bond market and the exchange bond market, making the issuance environment more friendly and transparent. As a result, it's more convenient for foreign friends to issue bonds, and naturally, they are more willing to come.
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Don't forget the tailwind of RMB internationalization. As the RMB travels further and its reputation grows, the demand for RMB-denominated assets from foreign issuers is also on the rise. Panda Bonds, being bonds priced in RMB, naturally become sought-after. Bo Wenxi, the Chief Economist of the China Region of the China Enterprise Capital Alliance, has said that the favor towards Panda Bonds is inseparable from the advancement of RMB internationalization.
Panda Bond Market, Three Key Features Stand Out
Let's extend the timeline a bit and take a look, the Panda Bond market is becoming increasingly interesting. According to Wind data, the total issuance in 2022 was 85.07 billion yuan, and in 2023, it reached 155.45 billion yuan. And this year? It's only halfway through the year, and the issuance amount is already close to last year's total. This pace is faster than a high-speed train!
The People's Bank of China's "2023 RMB Internationalization Report" specifically mentions three key features of the Panda Bond market: first, the interbank market has become the main battlefield for issuance; second, the issuance willingness of non-financial enterprises is getting stronger and stronger; third, the issuance term is mainly focused on three years and below. These three key features are as eye-catching as the three dark circles around a panda's eyes, making them unforgettable at first glance.
Future Outlook: Panda Bonds to Soar?
Speaking of the future, it's full of anticipation. Comrade Shi Lei has boldly predicted that the issuance scale of Panda Bonds in 2024 is expected to break through the 200 billion yuan mark! This is no small number, friends, it means that the Panda Bond market is about to enter a new period of expansion and acceleration.The Executive Deputy Secretary-General of the China Urban Experts Think Tank Committee, Lin Xianping, also made a statement: The issuance of Panda Bonds this year will definitely continue to grow. This is not only a sign of the improvement of the openness of China's bond market and the enhancement of its international influence, but also an important force in promoting the internationalization process of the Renminbi.
Ding Zhenyu, on the other hand, analyzed the significance of the issuance of Panda Bonds from another perspective: It can not only promote the further development of China's bond market but also provide more financing channels for foreign entities. As the Panda Bond market expands, the backgrounds, credit qualifications, terms, and varieties of issuers will become more diversified, which is very beneficial to the healthy development of the entire market.
Finally, we must mention the attitude of the People's Bank of China. The "Report" said that the central bank will continue to promote the development of the Panda Bond market, enhance the breadth and depth of the bond market, and steadily and orderly promote the high-level two-way opening of the bond market. It will continuously optimize the policy environment for cross-border investment and financing of the Renminbi to provide better services for the development of the real economy.

In summary, the craze for Panda Bonds is a microcosm of the vitality of China's economic and financial sector. It not only demonstrates the low-cost advantage of Renminbi financing but also reflects our country's firm determination to open up and internationalize the bond market. We believe that in the future, Panda Bonds will continue to shine on the international stage and contribute more to the prosperity and development of China's economy!