Chinese banking regulators are making plans to permit Russian energy firms to restart selling yuan-denominated bonds in mainland China, a step that would give a vital non-Western source of funding to Moscow and represent a strong deepening of economic relationships between the two countries. The possible relaunch of this so-called "Panda Bond" market would restore a trail first blazed by Russian aluminium behemoth Rusal.
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Senior Chinese financial policymakers signalled their approval of the proposal in recent talks with Russian energy executives. If it goes ahead, it will be the first time a Russian firm has raised capital on mainland China since the 2022 invasion of Ukraine.
The only historical precedent for such a step is from the aluminium sector. The most recent Russian firm to penetrate this market successfully was state-owned aluminium firm Rusal, which raised 1.5 billion yuan with Panda Bond issues in 2017. This proved the scalability of the Chinese bond market for Russian capital-intensive industrial companies looking to diversify their financing base away from the US dollar.
