The meetings held in China within the framework of the SCO (Shanghai Cooperation Organisation) demonstrated the transition of Russian-Chinese relations to a new level of financial cooperation. One of the main outcomes was Beijing’s announcement of its readiness to open its domestic bond market to Russian companies.
Today, the Chinese bond market is the second largest in the world, with over $21.5 trillion in circulation. So-called panda bonds, bonds denominated in yuan and issued by foreign issuers, are gradually gaining weight on this market. In 2024, their placement volume reached a historic record of nearly 195 billion yuan, equivalent to approximately $26.5 billion. In the first quarter of 2025 alone, the volume of issues amounted to another 41.6 billion yuan.
Now the situation is changing. Chinese regulators have officially confirmed their readiness to support new issues by Russian corporations, including Gazprom and Rosatom. The Chinese rating agency has assigned Gazprom the highest AAA rating with a stable outlook, effectively opening up access for the company to borrow in yuan on the domestic market of the PRC. Rosatom is also preparing to issue panda bonds, which will be the Russian energy company’s first large-scale venture in eight years. For Russian corporations, this means access to a new source of capital. After the introduction of Western sanctions, opportunities to borrow on international markets have sharply declined, and the Chinese market is becoming an alternative channel of financing. Unlike Western markets, there is no requirement for settlements in dollars or euros, which minimises the risk of blockages. All transactions will go through Chinese depositories, without the involvement of Euroclear or Clearstream, and the settlements themselves will be made directly in yuan.
In turn, by opening up its domestic bond market to Russian issuers, Beijing is strengthening the international position of its currency. The internationalisation of the yuan is a strategic goal for the Chinese authorities, and new issues of panda bonds are an important step towards transforming the national currency into a fully-fledged global reserve instrument. At the same time, China is gaining the opportunity to integrate Russia more deeply into its financial infrastructure, creating an alternative to the Western capital system.
From the point of view of global investors, the situation also looks promising. With yields on traditional markets declining, the yuan-denominated securities of large Russian energy companies may be of interest as a source of higher returns. However, the risks remain significant due to geopolitical tensions and the threat of secondary sanctions.
