Panda bond sales double in Q1 as global turmoil spurs bumper quarter

HONG KONG/SHANGHAI, April 1 (Reuters) - Foreign sales of local currency bonds in China hit a record 88.2 billion yuan ($12.81 billion) in the first quarter, more than doubling from a year earlier, as low rates and stable market conditions attract issuers and corporate demand grows for the country's currency.

March sales were also a record - at 37.8 billion yuan - and while small relative to larger developed centres of origination, the performance shows how things have held up through a volatile month and how a growing debt market makes the yuan more appealing to global issuers.

So-called panda bond sales, which are onshore, yuan-denominated debts raised by foreign entities, rose 101% from the first quarter of 2025, which was itself a record year, according to Reuters calculations based on official data.

"For some issuers outside of China, establishing a channel to access the yuan capital market certainly makes sense," said Terry Zhang, head of global strategy and business management at CSCI Pengyuan International. "Under the current backdrop, having multiple options is certainly valuable."

Singapore-based UOB, which is a repeat issuer and priced a 5 billion yuan, three-year panda bond at 1.83% in March, plans to raise more yuan debt.

"The onshore yuan market benefits from a larger and more established domestic investor base, which can provide deeper liquidity even during periods of global volatility, such as the current situation in the Middle East," said Koh Chin Chin, head of group central treasury, research and customer advocacy at UOB.

Slovenia raised 4 billion yuan in its inaugural panda bond issuance on Monday, marking its debut on China's interbank bond market and the first sovereign panda bond sale of the year.

From an investor standpoint Chinese debt has outperformed, with benchmark yields steady this month while inflation fears stemming from the war in the Mideast drove the heaviest fall since 2022 in the FTSE World Government Bond total return index .FTWGBIUSDT.

"As the yuan internationalisation continues to deepen ... international investors are increasingly willing to allocate capital to renminbi-denominated assets," said Kevin Fan, head of fixed income and currency product management at Hong Kong Exchanges and Clearing 0388.HK, at a conference in Hong Kong last week.

($1 = 6.8847 Chinese yuan)