China Reopens Panda Bonds to Russian Energy Giants, Boosting RMB Role in Global Finance

Panda Bonds Are Back: What China’s Re-opened Onshore Market Means for Russian Issuers, the RMB—and Sanctions Politics

China Revives Panda Bonds for Russian Energy Firms.Beijing is reopening its onshore RMB market to Russian issuers. Here’s how Panda bonds work, who benefits, the risks, and what’s next for RMB globalisation.

- Dr.Sanjaykumar pawar

Executive summary
What are “Panda bonds,” exactly?
Why this reopening is happening now
What changes for Russian corporates (especially energy)
What’s in it for China and the RMB
How Panda issuance works step-by-step (rules, ratings, disclosures)
Market size, liquidity, and pricing context
Key risks: sanctions, compliance, and execution pitfalls
Data snapshot & quick visuals
Strategic scenarios: best case, base case, bear case
Analyst take: our view on timelines, volumes, and pricing
Conclusion
FAQs
Sources

1) Executive summary

For the first time since 2017, China has reopened its domestic bond market to Russian companies—particularly state-owned energy giants like Gazprom. These firms are now preparing to issue Panda bonds, which are renminbi (RMB)-denominated bonds sold inside mainland China’s interbank bond market (CIBM). The decision follows high-level talks in Guangzhou between Chinese regulators and Russian executives, coinciding with renewed political momentum on the Power of Siberia 2 (PoS2) pipeline project.

This move goes beyond finance. It reflects the strategic deepening of China-Russia economic cooperation, offering Moscow a new lifeline for funding and giving Beijing another channel to promote the RMB’s international role.

Why This Matters for Russia

Funding Diversification: Panda bonds allow Russian firms to bypass restrictions on dollar and euro borrowing, which have been severely limited by sanctions.
Trade Alignment: With a growing share of Russia-China energy trade settled in RMB, issuing RMB bonds creates a natural currency hedge.
Investor Base Expansion: Access to the world’s second-largest bond market helps Russian corporates build credibility and recognition among Asian investors.

Why This Matters for China

Strengthening the RMB: Every Panda bond issued adds to the globalisation of the renminbi, expanding its use beyond trade payments into long-term finance.
Market Showcase: Allowing high-profile Russian issuers into the CIBM demonstrates the depth and liquidity of China’s domestic market to other emerging economies.
Strategic Leverage: By selectively opening its financial system, Beijing reinforces its role as a key partner for countries cut off from Western capital.

Broader Implications

The revival of Panda bonds signals a careful balancing act. While it helps Russia plug its financing gaps and aligns with China’s ambitions to internationalise the RMB, it also carries sanctions compliance risks. Chinese regulators and financial institutions will need to navigate these complexities to avoid unintended exposure.

Ultimately, the reopening marks a significant milestone in Sino-Russian financial cooperation, underlining how geopolitics is reshaping the architecture of global capital markets.

2) What are “Panda bonds,” exactly?

Panda bonds are a unique financing tool that reflects both China’s financial openness and global demand for RMB-denominated assets. Unlike offshore “dim sum bonds,” Panda bonds are issued inside mainland China, making them an important channel for foreign governments, companies, and financial institutions seeking access to the world’s second-largest bond market.

Key Features of Panda Bonds

Currency & Market: Issued in renminbi (RMB) within China’s Interbank Bond Market (CIBM) or stock exchanges (Shanghai/Shenzhen).
Who Can Issue: Non-Chinese entities such as sovereign governments, state-owned enterprises, and multinational corporates.
Regulatory Oversight: Governed by the People’s Bank of China (PBoC), the Ministry of Finance (MoF), and supervised under NAFMII rules.
Credit Rating: Issuers must obtain a domestic Chinese credit rating, ensuring transparency for local investors.
Disclosure & Settlement: Strict compliance with onshore reporting, accounting, and custody rules through CCDC/SHCH.

Historical Context

The most notable Russian example was UC RUSAL, which in 2017 issued Panda bonds after registering up to RMB 10 billion. Since then, activity has been limited, making China’s recent reopening of Panda markets to Russian firms in 2025 highly significant.

👉 In essence, Panda bonds not only provide funding but also promote RMB internationalization, deepening China’s role in global finance.

3) Why this reopening is happening now

China’s decision to revive the Panda bond market for Russian issuers in 2025 is not a coincidence. It’s the result of overlapping geopolitical pressures, energy cooperation, and financial strategy. Let’s break it down:

1. Geopolitics + Financing Need

Since 2022, Western sanctions have locked Russian corporates—especially energy giants—out of traditional dollar and euro bond markets. With capital access shrinking, Moscow has been looking east. China is cautiously stepping in, but not for everyone: approvals are selective, aimed at state-linked energy firms that align with long-term strategic goals.

Recent signals came from a late-August meeting in Guangzhou, where regulators and Russian executives discussed pathways for issuance. The momentum gained speed when Gazprom, Russia’s gas behemoth, secured a AAA rating from Chinese agency CSCI Pengyuan. This rating is a critical prerequisite to tap China’s onshore markets, showing Beijing’s willingness to accommodate—under strict compliance.

2. Trade and Energy Ties

The Panda bond revival also fits neatly into the larger China–Russia energy partnership. Both countries are actively discussing the Power of Siberia 2 pipeline, a massive project to channel Russian natural gas into China. While the deal isn’t finalized, it’s a political priority repeatedly spotlighted in 2024 and 2025.

By enabling Russian firms to raise RMB directly in China, Beijing ensures financing channels exist for the infrastructure and energy trade that bind the two economies closer. For Moscow, it’s a survival tool; for Beijing, it’s an investment in energy security.

3. RMB Internationalisation

The final driver is financial strategy. China has long aimed to internationalise the RMB. According to SWIFT’s RMB Tracker, the currency’s share in global payments has been rising steadily through 2024–2025. However, the IMF COFER data shows the RMB still makes up just 2.18% of world reserves as of Q4 2024—a fraction compared to the U.S. dollar’s dominance.

By reopening Panda bonds, China extends RMB use beyond trade settlement into capital markets. It signals to global investors that the yuan is more than a payment tool—it’s a financing currency. That’s a step Beijing has been building toward for years.

✨ This reopening is a strategic alignment of necessity and ambition: Russia needs financing, China seeks deeper RMB use, and both benefit from stronger energy and trade bonds.

4) What changes for Russian corporates (especially energy)

China’s decision to reopen the Panda Bond market for Russian companies is more than just financial news—it’s a potential lifeline for Russian corporates, particularly in the energy sector. Here’s what it really means:

🔹 Currency Match

For energy giants like Gazprom and Rosneft, issuing debt in renminbi (RMB) creates a natural hedge. With an increasing share of trade with China already invoiced in RMB—especially in gas, oil, and petrochemicals—raising capital in the same currency reduces foreign exchange risk. Instead of converting between rubles, dollars, or euros, Russian firms can align revenues and liabilities directly in RMB, simplifying cash flow management.

🔹 Market Depth

Unlike the offshore “dim sum” market in Hong Kong, China’s onshore bond market is vast. With roughly RMB 183 trillion outstanding as of mid-2025, it is the world’s second-largest bond market. This scale means Russian issuers could, in theory, tap into a much deeper investor base, ranging from Chinese state banks to institutional investors looking for diversification. For corporates used to frozen Western capital markets, this presents a rare alternative with far greater liquidity.

🔹 Process Readiness

Of course, accessing China’s domestic market isn’t as simple as showing up. Issuers need to secure a domestic credit rating, complete NAFMII registration (for non-financial corporates), and provide disclosures that satisfy Chinese regulators. Recent news that Gazprom received a AAA rating from a Chinese agency suggests that Russian firms are actively preparing to cross this hurdle. Once ratings and registrations are complete, actual issuance could follow swiftly.

🔹 But… Sanctions Risk Lives Here

The biggest complication is geopolitics. Bookrunners, custodians like CCDC and SHCH, and even investors must ensure these transactions do not violate international sanctions. Every step—from who underwrites the bonds to how the proceeds are used—will face scrutiny. This likely means tightly structured deals, limited syndicate participation, and highly selective investor groups. In practice, only a few well-positioned Russian firms may be able to pull it off without triggering compliance alarms.

For Russian corporates, particularly in energy, Panda bonds could provide much-needed funding stability, currency alignment, and access to Asia’s largest investor pool. But success depends on navigating the sanctions minefield and winning investor trust in a market that is both promising and politically sensitive.

5) What’s in it for China and the RMB

China’s decision to reopen the Panda bond market to Russian firms is not just about helping Moscow access capital—it’s about Beijing’s long-term vision for the renminbi (RMB). The move fits into China’s broader economic and geopolitical strategy, where finance is used as a tool for influence, resilience, and global positioning. Let’s break down what’s really at stake.

Policy Objectives for China

🌍 Internationalisation of the RMB
Every Panda bond issued by a foreign company increases the stock of RMB-denominated assets available globally. For China, this is a step toward positioning the RMB as a serious alternative to the U.S. dollar in international finance. Foreign sovereigns and corporates holding RMB assets are, by extension, more invested in the currency’s stability and growth.
📊 Market Development
The more diverse the issuers in China’s onshore bond market, the more credible pricing benchmarks become. Russian state energy firms joining the market means investors gain fresh reference points, which in turn deepens liquidity and improves transparency for the broader market. In short, Panda bonds make the RMB market look more like a global financial hub than a closed domestic pool.
🤝 Strategic Leverage
Finance is power. By offering Russian companies access to its domestic market, China strengthens its hand in bilateral energy and security negotiations. It’s not a free lunch—issuers must follow Chinese compliance guardrails—but the symbolism is clear: the RMB is becoming a currency of geopolitical partnership, not just commerce.

Reality Check

Despite these ambitions, it’s important to keep the numbers in perspective. According to IMF COFER data, the RMB made up just 2.18% of global foreign exchange reserves in Q4 2024. Meanwhile, the U.S. dollar still dominates with 57.8%. Panda bonds may expand the RMB’s footprint, but they are more evolutionary than revolutionary.

Think of it this way: every Panda bond issued adds another brick to the RMB’s international house. The house is still small compared to the dollar’s skyscraper—but it’s growing, brick by brick.

For China, reopening Panda bonds to Russian issuers is a strategic signal as much as an economic move. It tells the world: the RMB is not just a settlement currency, but a platform for capital markets and cross-border finance. The road ahead may be gradual, but each deal plants the RMB deeper into the architecture of global finance.

6) How Panda issuance works step-by-step (rules, ratings, disclosures)

Issuing a Panda bond—a renminbi (RMB)-denominated bond sold by foreign entities in mainland China—requires more than just market appetite. It follows a structured process governed by Chinese regulators, designed to protect investors, maintain transparency, and align with China’s broader financial system. Here’s how it works in practice:

A. Eligibility & Venue

Not every foreign entity can step into China’s onshore bond market. Eligible issuers include:

Foreign sovereigns and government agencies
Multilateral development banks (like the World Bank or ADB)
Financial institutions
Non-financial corporates, such as large energy or industrial firms

Most Panda bonds are issued in the China Interbank Bond Market (CIBM), which accounts for the majority of bond trading volume in China. A smaller share may list on exchanges such as the Shanghai Stock Exchange (SSE) or Shenzhen Stock Exchange (SZSE).

B. Gatekeepers & Documents

Before entering the market, issuers must clear several important hurdles:

NAFMII registration: Non-financial corporates must register their debt financing instruments (DFIs) with the National Association of Financial Market Institutional Investors.
Domestic rating: Every issuer needs at least one Chinese credit rating (sometimes two for bigger deals). For instance, Gazprom recently secured a AAA rating from CSCI Pengyuan, showing its readiness to approach the Panda market.

C. Ongoing Obligations

Transparency doesn’t stop once the bonds are sold. Issuers are required to:

Disclose use of proceeds, such as funding infrastructure, refinancing debt, or sustainability-linked projects. Green, social, and sustainability (GSS) labels are increasingly popular.
Provide regular disclosures, including financial statements and event updates, filed through NAFMII.
Ensure settlement and custody through trusted Chinese institutions like China Central Depository & Clearing (CCDC) or Shanghai Clearing House (SHCH).

D. The Green Panda Variant

With global demand for sustainable finance growing, Panda bonds also come in a green format. According to the Climate Bonds Initiative, issuers can align with China’s green taxonomy, undergo an external review, and provide post-issuance reporting. For Russian state-owned enterprises, this could be relevant for projects like methane reduction or pipeline electrification.

In short, Panda bonds combine China’s vast liquidity with strict regulatory oversight. For foreign issuers—from sovereigns to corporates—the process offers both opportunity and responsibility, especially as the RMB gains global traction.

7) Market size, liquidity, and pricing context

Understanding the market size, liquidity, and pricing backdrop of China’s onshore bond market is essential to grasp why Panda bonds—especially for Russian issuers—matter today. The numbers reveal both the depth of opportunity and the unique challenges ahead.

Scale & Liquidity

According to the People’s Bank of China (PBoC), the total value of bonds in custody stood at roughly RMB 183 trillion by the end of March 2025. This makes China the world’s second-largest bond market, with the interbank bond market (CIBM) being the primary venue for trading.
Liquidity remains robust. In July 2025 alone, interbank activity—including lending, cash bond trading, and repos—reached RMB 222.44 trillion. This sheer turnover shows how active and fluid China’s bond ecosystem has become, offering foreign issuers like Russian energy companies a credible source of capital.

Rates Backdrop

The pricing environment is equally important. Throughout 2024–2025, yields on high-grade Chinese government bonds remained exceptionally low. Investors have been piling into safe assets amid economic uncertainties, while Chinese policymakers continue to support the bond market with accommodative measures.

For domestic issuers, this translates into low funding costs and access to a deep investor base.
For foreign issuers, such as Russian corporates, the picture is more nuanced. While low yields create favorable conditions, foreign credits generally face a risk premium, meaning they must pay slightly higher interest to attract investors. This premium reflects both compliance considerations and market caution.

Comparables & Precedents

The market is not without examples of success:

In July 2025, Hungary issued a landmark RMB 5 billion Panda bond, the largest single sovereign Panda bond to date and the first five-year tenor by a sovereign. Its success signals strong appetite among Chinese investors for non-Chinese credits when structured properly.
For Russia, the benchmark remains RUSAL’s 2017 Panda bond issuance. While historically useful, today’s geopolitical environment makes the pricing and compliance landscape very different. Any new Russian issuance will face tighter scrutiny and may need to offer investors attractive spreads to clear the market.

8) Key risks: sanctions, compliance, and execution pitfalls

The reopening of China’s Panda bond market to Russian corporates comes with opportunity, but also with serious risks. Issuers, underwriters, and investors must navigate a complex landscape where geopolitics meets finance. Here are the four most critical challenges:

1. Sanctions compliance

The elephant in the room is sanctions risk. With Western restrictions still in place, issuers will likely be limited to non-SDN (Specially Designated Nationals) parent entities. This means structuring through subsidiaries or SPVs that are ring-fenced from prohibited activities.
Even then, Chinese banks’ appetite varies. While some institutions may cautiously participate, others could step back to avoid potential secondary sanctions. This selective participation could narrow the syndicate pool and make execution slower or more expensive.

2. Documentation & disclosure

Panda bonds require strict alignment with NAFMII templates, domestic ratings, and local-language disclosures. Deviations trigger regulator queries, and the process can easily stretch timelines.
For Russian issuers unfamiliar with onshore standards, translation, auditing, and compliance reviews add another layer of cost and delay. Transparency is not optional—it’s a gatekeeping requirement in China’s interbank bond market (CIBM).

3. Currency & capital flow risk

Even when firms generate RMB revenues from exports to China, they face the complexities of RUB-CNY dynamics and limited convertibility. Hedging costs and liquidity constraints can erode the financial benefit of RMB issuance.
The Bank of Russia itself acknowledges the rising role of RMB in reserves and markets, but warns of structural limitations—a reminder that currency risks remain real.

4. Rate & demand risk

China’s government bond yields remain low, but foreign SOEs—especially sanctioned-linked names—carry significant credit spreads. Headlines alone can widen spreads overnight.
To ensure demand, syndicates must court real-money investors early, including policy-bank accounts and bank treasuries. Without this base, deals risk weak book coverage or volatile secondary trading.

The Panda bond route offers strategic financing benefits, but the execution pitfalls are non-trivial. Success depends on careful issuer selection, airtight compliance, investor education, and transparent documentation. In short, it’s not a quick fix—it’s a test of financial engineering under geopolitical pressure.

9) Data snapshot

Key metrics at a glance

Theme	Latest datapoint
Size of China bonds in custody (end-Mar 2025)	~RMB 183.1 trn (interbank: RMB 161.8 trn)
Interbank monthly activity (Jul 2025)	RMB 222.44 trn across lending/cash bonds/repos
RMB share of allocated FX reserves (2024 Q4)	2.18% (USD 57.8%; EUR 19.8%)
SWIFT RMB payments share (2025)	Rising vs 2024 (monthly trackers show RMB moving up the ranks)
Russian Panda issuance since 2017	RUSAL placed in 2017; no major corporate since—until the present reopening push
Current preparatory step	Gazprom assigned AAA by CSCI Pengyuan (China) on Sep 8, 2025

10) Strategic scenarios

China’s decision to reopen the Panda Bond market to Russian issuers marks a turning point for both RMB internationalisation and Sino-Russian energy cooperation. But the trajectory ahead isn’t fixed—it depends heavily on market reception, regulatory scrutiny, and geopolitical tensions. Let’s break down the three possible scenarios:

✅ Best Case (2025–2026)

Multiple issuers succeed: Between two and three major Russian state-linked companies—likely energy giants such as Gazprom—successfully issue RMB-denominated Panda Bonds worth RMB 5–10 billion each, with maturities of 3–5 years.
Green finance push: We could see follow-on taps and green Panda projects, targeting methane reduction, cleaner gas processing, and efficiency upgrades. By aligning with Climate Bonds Initiative (CBI) frameworks, Russian firms may attract environmentally focused investors, broadening the buyer base.
Impact: This scenario would strengthen Russia’s ability to secure stable yuan financing while enhancing China’s role as a global green finance hub.

⚖️ Base Case

Flagship issuance only: A single energy sector giant launches a carefully structured Panda Bond. The deal likely comes with tight covenants and a conservative use-of-proceeds disclosure to reassure regulators and investors.
Gradual approvals: Additional Russian corporates wait on the sidelines as China’s regulators assess market reaction, liquidity, and compliance optics.
Impact: Russia gains a symbolic breakthrough but not a flood of capital. China maintains a cautious stance, balancing its geopolitical partnership with regulatory prudence.

❌ Bear Case

Deals stall early: Escalating sanctions or new Western guidance may cause underwriters, custodians, and investors to withdraw support. Issuances could get stuck at the domestic rating or NAFMII registration stage, never reaching the market.
Pricing challenges: Even if approval comes, investors may demand prohibitively high spreads compared to Chinese SOEs, making issuance unattractive.
Impact: Russia misses a financing opportunity, and China avoids confrontation but loses momentum in its push to expand the RMB’s global role.

The future of Russia’s Panda Bonds hinges on the balance between geopolitical risk and financial innovation. The best case accelerates RMB globalization and deepens bilateral energy ties. The base case offers symbolism without scale. The bear case underscores how fragile market confidence remains in a sanctions-driven environment.

👉 If successful, Panda Bonds could become a template for alternative financing among sanctioned or emerging economies, positioning China’s bond market as a critical player in the new financial order.

11) Analyst take: volumes, pricing, and investor reception

When looking at China’s decision to reopen its Panda Bonds market to Russian issuers, analysts are cautious but optimistic. The onshore China Interbank Bond Market (CIBM) is vast—worth more than RMB 183 trillion—but early Russian deals will not come in a flood. Instead, the volumes, pricing strategy, and investor reception will be gradual, measured, and politically sensitive.

Volumes: Measured First Steps

Initial issuance is expected to be in the single-digit billions of RMB per Russian issuer.
These “test transactions” will check both regulatory process and political tolerance before larger placements follow.
Gazprom’s recent domestic AAA rating in China is one sign that the groundwork is being laid for such carefully sized deals.

Pricing: Conservative Entry Strategy

Expect conservative pricing compared to Chinese state-owned enterprises (SOEs). Investors will likely demand a “novelty + compliance” premium to cover sanctions-related risk.
If early bonds trade well in the secondary market, issuers may re-price tighter in follow-up offerings, reducing borrowing costs.
This two-step approach—premium at launch, tighter spreads later—is common in frontier Panda issuance.

Investor Base: Who Might Buy

Bank treasuries and policy-bank-affiliated investors may provide the anchor demand, especially if deal structures clearly separate proceeds from sanction-sensitive activities.
Global emerging market funds with RMB allocations could participate selectively. However, their compliance teams will be extra cautious, screening for sanction risks.
Domestic Chinese funds may join for diversification, but risk appetite will be tested.

Knock-on Effects: Broader Implications

If Russian Panda Bonds succeed, other sanctioned-adjacent issuers—think Iran-linked corporates or frontier sovereigns—might explore similar RMB onshore financing.
For China, these deals push the RMB internationalisation agenda further, not just in trade settlements but also in capital market financing.
Still, the IMF COFER shows RMB reserves at just 2.18% of global totals (vs. USD at ~58%). Panda issuance will help gradually expand this footprint, but the process will be slow and closely monitored.

Early Panda Bonds from Russian issuers will be small, conservatively priced, and politically sensitive, but if they succeed, they could open new RMB pathways for emerging-market financing and accelerate China’s long-term goal of building a global bond market rivaling the dollar and euro.

12) Conclusion

China’s quiet reopening of its Panda-bond window to Russian corporates is more than symbolism. It’s a practical test of how far RMB-centric finance can stretch under the weight of sanctions politics—without breaking compliance. For Moscow, it’s a path to match RMB inflows and outflows more efficiently and reduce reliance on volatile FX channels. For Beijing, it deepens market breadth and international role for the RMB while showcasing the capacity of the CIBM to host complex cross-border deals.

Success will hinge on meticulous structuring, crisp disclosures, and careful counterparty selection. If early transactions price and trade well, expect more issuers—and more RMB to flow through the arteries of Eurasian energy trade.

13) FAQs

Q1) How are Panda bonds different from “dim sum” bonds?
Panda = RMB bonds issued onshore in mainland China under Chinese rules. Dim sum = RMB bonds offshore (mainly Hong Kong) under international/host-market rules.

Q2) Who can buy Panda bonds?
Qualified onshore institutions and, in some cases, foreign investors with CIBM access. Settlement is usually via CCDC/SHCH in the interbank market.

Q3) What rating is required?
A domestic Chinese rating is customary. Recent example: Gazprom received AAA from CSCI Pengyuan as part of its preparedness.

Q4) Are there “green Panda” bonds?
Yes. Issuers can align with China’s green guidelines, obtain an external review, and commit to post-issuance reporting—see the Climate Bonds Initiative’s handbook.

Q5) How big is China’s bond market?
Roughly RMB 183 trn in custody as of Mar 2025; the second-largest globally, dominated by the interbank venue.

Q6) Is PoS2 done and dusted?
No. There is political support and ongoing negotiation, but detailed commercial terms/timetable remain fluid as of September 8, 2025.

14) Sources -

Financial Times reporting on China reopening Panda bonds to Russian firms; FirstFT coverage (Sep 8, 2025).
Bloomberg roundup of FT’s scoop (Sep 7–8, 2025).
Reuters: CSCI Pengyuan assigns AAA to Gazprom (Sep 8, 2025).
PBoC Financial Market Reports & monthly statistics—market size and activity (May & July 2025).
NAFMII: Panda bond manuals/resources & market reports.
Climate Bonds Initiative: How to issue a green Panda bond (context on green standards).
IMF COFER data briefs on reserve currency shares (2024 Q4–2025 Q1 updates).
SWIFT RMB Tracker: monthly updates on RMB payments share (2024–2025).
ADB AsianBondsOnline: PRC market size & summaries (Q1 2025).
China Daily / LSEG: 2025 sovereign Panda activity; Hungary RMB 5 bn deal.
2017 precedent: RUSAL Panda bond issuance.
Reuters and FT on Power of Siberia 2 status (2024–2025).

Sunday, September 7, 2025

China Reopens Panda Bonds to Russian Energy Giants, Boosting RMB Role in Global Finance