Yuan for the Money: Foreign issuance of RMB bonds is growing In late September, SAFE released its H1 2026 Balance of Payments Report. The report highlighted that foreign issuers made up 54% of panda bond fundraising in H1 2026, surpassing Chinese-background issuers for the first time. Additionally, the report noted that foreign issuers intended to use most of those proceeds, 68%, offshore, which continues to build out offshore renminbi markets. I went back and looked at the data on international RMB bonds. Some thoughts: 1.) CNY increasing its role as a funding currency: The yield differential between the US 10-year and the Chinese 10-year is over 300 bps. A dominant currency has 3 roles: reserves, vehicle, and funding. The third is the fastest to shift given that funding demand is highly sensitive to yield differentials. 2.) Rising RMB trade settlement reduces the need to hedge: Bloomberg notes that hedging CNY bonds can run about 3%, which almost eliminates the gains earned from the aforementioned yield differential. However, as China settles a significant portion of its trade in RMB, a growing pool of borrowers has a natural use for the currency and does not need to hedge, preserving the gain. 3.) Record year for panda bond issuance: 2026 was a record year for panda bonds (foreign entities issuing inside mainland China in RMB). A total of $23B equivalent has been issued YTD, with the next highest year being 2024 at $13B. The single largest issuer was China Mengniu Dairy at around $3.9B through its Hong Kong entity. However, European banks and corporates continue to like this market, and we saw some new sovereigns — Indonesia, Kazakhstan, Pakistan, and Slovenia — tap the market. 4.) Foreign offshore RMB bonds also hit a record: Foreign offshore RMB issuance set a new high totaling over $65B equivalent YTD. A notable entrant was South Korea, where corporates issued around $680M equivalent of RMB debt domestically, known as Kimchi bonds. (Who names these? I want that job.)