Indonesia is set to become the latest country to issue panda bonds with the offering launch set for Thursday, as analysts point to the growing attractiveness of China's financial markets amid steady yuan internationalization.

Indonesia, which is Southeast Asia's largest economy, has begun marketing its inaugural yuan-denominated bonds in China's domestic debt market, Bloomberg reported late on Tuesday.

The country is offering three-year and five-year panda bonds, targeting a combined initial issuance as much as 7 billion yuan ($1 billion), according to offering documents.

Panda bonds are yuan-denominated bonds issued by overseas entities in China. A boom in panda bond issuance this year has highlighted the attractiveness of China's financial markets and the yuan, Chinese and foreign analysts said.

The announcement by Indonesia came amid a notable trend in the 2026 panda bond market of a rise in issuance by foreign issuers. Major issuers include sovereign governments, such as Kazakhstan, Slovenia and Pakistan, international banks including Morgan Stanley, Deutsche Bank and BNP Paribas, and multinational corporations like Volkswagen and Henkel, according to media reports.

In late June, Brazil became the first Latin American country to register for sovereign panda bond issuance, and the Chinese government welcomed the participation of both the Brazilian government and corporate entities in the panda bond market, according to a statement on the official WeChat account of the People's Bank of China (PBC), China's central bank. Brazil plans to raise up to 5 billion yuan with its inaugural issuance of panda bonds, according to media reports.

On May 15, the Asian Infrastructure Investment Bank, together with the Asian Development Bank, announced that it was supporting Pakistan's first yuan-denominated panda bond issuance worth 1.75 billion yuan. According to the Xinhua News Agency, this marked Pakistan's first such sovereign bond in offshore capital markets.

In the first half of 2026, total panda bond issuance surged by 69 percent year-on-year, exceeding 160 billion yuan in total, according to statistics from the PBC.

Samuel Tse, senior economist at Singapore-based bank DBS, told the Global Times on Wednesday that panda bond issuance is now on the rise, coinciding with yuan internationalization. Trade between China and Belt and Road Initiative partner countries is gaining traction, and the partnerships between China and the issuing countries or companies are appealing to Chinese investors.

Foreign companies and sovereigns favor Panda bonds for three main reasons, Tse said. "First, the funding cost is relatively cheaper than for US dollars. Second, there is a growing need for yuan funding amid the accelerated use of yuan. Third, onshore liquidity remains ample, thereby enabling onshore institutions to absorb such bond supply."

"Taking Brazil as an example, China has surpassed the US as Brazil's biggest trading partner. It is logical for international trade or investment between Brazilian companies and Chinese counterparts to settle in Chinese yuan, and issuing Chinese yuan bonds allows for a natural hedge," Tse said.

In recent years, the panda bond market remained robust, becoming increasingly attractive to international issuers. The issuance volume hit a record 197.8 billion yuan in 2024 and 183.1 billion yuan in 2025, CNBC reported on June 17, citing data from Moody's.

"The jump in panda bond issuance is mainly driven by notable interest rate advantages, a supportive regulatory stance and rising demand from both issuers and investors seeking greater asset diversification," an analyst with Moody's Ratings told the Global Times on Wednesday.

For offshore borrowers, the panda bond market serves as a practical option to diversify their global funding channels and access a deep, liquid yuan investor pool. On the investor side, China's bond market continues to be a favored destination for global issuers looking to diversify their investor base, the analyst noted.

In July 2025, the National Development and Reform Commission, along with other departments, issued a notice on implementing several measures to encourage domestic reinvestment by foreign-invested enterprises. The notice mentions that loans from affiliated foreign shareholders and "panda bonds" required for domestic reinvestment by eligible foreign-invested enterprises will be included in the "green channel" management, with an aim to optimize the management process.

"The sudden popularity of panda bonds issuance this year and the fact that some overseas issuers have adopted panda bonds as a regular financing channel have shown that the appeal of the yuan stems not only from currency stability or interest rate spreads, but also from the financing convenience and liquidity support that China's further financial market opening-up offers to global issuers," Tian Lihui, dean of the Institute of Financial Development at Nankai University, told the Global Times. "This is a systemic kind of attractiveness."

According to data from the PBC, more than 170 billion yuan of panda bonds were issued by governments, international development institutions, financial firms and large corporations from multiple countries in 2025, with outstanding bonds rising 34 percent year-on-year, according to Xinhua.