Renminbi "cross-border financing" is soaring!

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At present, overseas sovereign countries, multinational corporations, and financial institutions are accelerating the use of RMB for cross-border financing; Dim Sum bonds, Panda bonds, and offshore RMB loans are all expanding rapidly in parallel.

According to data compiled by Bloomberg, as of now, the issuance size of Panda bonds (RMB bonds issued within China by foreign issuers) and Dim Sum bonds (RMB bonds issued outside China by foreign issuers) has reached 218 billion yuan this year to date, a new high for the same period, with participation from the Indonesian government, Morgan Stanley, and others.

Meanwhile, in 2025, the combined total of relevant RMB bond financing and offshore RMB loans is expected to reach 1.15 trillion yuan, a figure that has tripled in just five years, also setting a new record.

Since the end of last year, Wall Street analysts’ expectations for further RMB appreciation have increased. At the same time, policy signals are becoming more frequent; according to Xinhua News Agency on February 26, the People's Bank of China issued a notice supporting and regulating RMB cross-border interbank financing business, providing liquidity to the offshore market.

Panda bonds "move from niche to mainstream tools," more intensive foreign issuance

According to reports, an increasing number of overseas institutions are choosing to issue RMB bonds within China, driving the Panda bond market to gradually transition from being dominated by multilateral agencies to a more diversified range of industries and issuers.

Data shows that since the start of this year, Panda bond issuance has totaled about 51.4 billion yuan, the highest for the same period. The report also notes that although overseas subsidiaries of Chinese companies are still the main issuers, the number of issuances by foreign borrowers has increased from 6 in 2015 to 36 last year; Morgan Stanley and Barclays will both issue again in 2026.

Liu Wei, Deputy General Manager of the Investment Banking Center at Bank of China, stated: "Offshore issuers are incorporating Panda bonds into their mid- to long-term debt management frameworks and regard them as regular financing tools. Borrower behavior has fundamentally changed."

Low interest rates + trade settlement: Two driving forces behind RMB financing demand

The report attributes this round of increased activity to multiple overlapping factors: China’s relatively lower interest rates, a phased appreciation of the RMB, and some investors seeking to diversify away from heavy USD concentration in their asset allocations.

The cost comparison is more intuitive in sovereign financing. When the Indonesian government issued dual-currency sovereign bonds last month, the issuance rate of its 10-year offshore RMB bond was about 100 basis points lower than its 8-year euro bond. Against this backdrop, market figures show that (excluding issuances by Hong Kong authorities and the Chinese central government), since 2026, Dim Sum bond issuance has reached about 103 billion yuan, nearly double the same period last year.

At the same time, the use of RMB in trade settlement has increased actual "demand to hold RMB." Data shows that the share of RMB in China’s cross-border goods trade settlement rose to 34.5% last year, up from a low of about 10% in 2017.

Aidan Yao, a strategist at Amundi Asset Management, said: "RMB internationalization is gaining real traction, especially in trade settlement and financing." He also stated that settling more in RMB will "lead to demand spilling over into offshore bond markets, forming a positive feedback loop."

The use of RMB in carry trade transactions is also increasing. Aidan Yao said, "China’s RMB is becoming the alternative to the yen as a global carry trade financing currency." Samuel Tse, a senior economist at DBS Bank, said, "De-dollarization remains an ongoing theme; RMB internationalization will continue despite tensions in the Middle East," and noted that last year there were capital inflows into China’s bonds and stocks.

Policy: Central bank issues notice to regulate cross-border interbank financing

Regarding cross-border RMB liquidity arrangements, Xinhua News Agency reported on February 26 that in order to enhance capital account openness, develop the offshore RMB market, and improve macroprudential management of cross-border capital flows, the People’s Bank of China issued a notice on February 26 supporting domestic banking institutions and overseas institutions in carrying out regulated RMB cross-border interbank financing activities.

RMB cross-border interbank financing is an important channel for domestic banks to provide RMB liquidity to the offshore market and promote RMB cross-border use.

According to the introduction, the People's Bank of China’s "Notice on Issues Related to RMB Cross-border Interbank Financing Business of Banking Financial Institutions" covers all types of RMB cross-border interbank financing business, linking the net RMB cross-border interbank financing outflows of banking financial institutions to their capital levels and funding strength, promoting rational business activities. The notice sets macroprudential management parameters, with countercyclical adjustment according to market conditions. The parameter settings fully take into account market demand and banks' operating conditions, which is conducive to providing stable RMB liquidity to the offshore market and promoting cross-border use of the RMB.

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