Deutsche Bank: RMB internationalization enters a new development stage driven by "dual engines"

The latest report by Deutsche Bank Research states that under clear policy support and continuous optimization of market structure, the internationalization of the renminbi is entering a new development stage driven by "dual engines." European institutions have become the "main force" in the internationalization process of the renminbi financing market, occupying a leading position among foreign issuers of panda bonds and dim sum bonds. Yin Zhen, CEO of Deutsche Bank China, stated in an interview with reporters that when traditional global major financing currencies such as the US dollar and Euro are in a relatively high interest rate cycle, the renminbi not only has significant financing cost advantages but also become an attractive alternative choice in the macro background of global de-dollarization and increased use of local currencies in emerging markets. Deutsche Bank cited data from Wind that in the first half of this year, the issuance volume of panda bonds increased by over 60% year-on-year, indicating that its appeal is no longer limited to financing cost advantages. For multinational companies, panda bonds are transitioning from a "tactical option" to a "strategic component." Automotive manufacturers such as Volkswagen, Mercedes-Benz, and BMW, as well as chemical companies like BASF, Bayer, and Henkel, have repeatedly entered the panda bond market in recent years. Given the large onshore operations and revenue of these European companies in China, financing in local currency can naturally hedge against the foreign exchange risks brought about by their renminbi revenue exposure. Meanwhile, the offshore renminbi market, particularly the dim sum bond market, is demonstrating a high level of maturity. According to Wind data, as of the first half of this year, the total issuance size of dim sum bonds has exceeded 800 billion yuan, a nearly 50% year-on-year growth. Deutsche Bank's report states that dim sum bond issuers are increasingly diverse, with the proportion of overseas issuers climbing to over 25%. Among domestic issuers, technology and IT industries, known as the "new economy," have replaced traditional industries to become the new dominant issuers, in order to further meet their capital expenditure needs in areas such as artificial intelligence and cloud computing.