Onshore Debt Capital Markets in China

How onshore debt capital markets are organised

China's onshore debt capital markets are among the largest in the world and are split into two main venues with different regulators. The China Interbank Bond Market (CIBM), supervised by the People's Bank of China (PBOC), is where most government, policy bank, financial and corporate debt is issued and traded among institutional investors. The exchange bond market on the Shanghai, Shenzhen and Beijing stock exchanges is supervised by the China Securities Regulatory Commission (CSRC) and hosts corporate bonds, enterprise bonds, convertibles and asset-backed securities.

For an issuer, the choice of venue determines the registration body, the product menu, the investor base and the disclosure and trustee rules that apply. For an investor, it determines the access channel, custody and settlement arrangements. Treasury bonds and local government bonds, issued under Ministry of Finance arrangements, trade in both venues and anchor the yield curve against which corporate debt is priced.

Why the structure matters for foreign groups

Foreign-invested enterprises incorporated in China can issue in onshore debt capital markets on the same basis as domestic companies, and offshore parents can issue panda bonds. Foreign investors, meanwhile, hold a growing share of government and policy bank bonds. Both groups need to understand that the two venues are not simply alternative trading screens: they have separate rulebooks, separate infrastructure and, in some cases, different treatment of the same economic product. Early decisions about venue shape everything that follows, from which underwriter is appointed to how bondholders are represented if things go wrong.

Hong Kong-based treasury centres of multinational and Chinese groups frequently run both onshore and offshore programmes, and ASEAN-headquartered groups with large China operations increasingly consider renminbi funding to match local revenues. In each case, the starting question is the same: which entity borrows, in which venue, and how the proceeds move within the group.

Interbank market products

Non-financial enterprises issue debt financing instruments in the interbank market after registration with the National Association of Financial Market Institutional Investors (NAFMII), a self-regulatory organisation under PBOC guidance. Financial institutions issue financial bonds, subordinated and capital instruments, which are approved under PBOC and sector regulator rules.

NAFMII registration classifies issuers by scale, rating and disclosure record. Mature, frequent issuers can register multiple products under a single registration and draw down flexibly; first-time and smaller issuers face more detailed review and product-by-product registration. Settlement and custody run through China Central Depository & Clearing or Shanghai Clearing House, depending on the instrument. Securitisation products are discussed on our securitisation, ABS and ABN page.

Exchange market corporate and enterprise bonds

Since the revised Securities Law took effect on 1 March 2020, public offerings of corporate bonds on the exchanges have used a registration-based system: the exchange reviews the application and the CSRC registers it. Non-public corporate bonds sold to qualified investors are handled by the exchanges with filing rather than registration.

Non-public issues suit issuers that want speed, a narrower investor group or less extensive public disclosure. They are limited to qualified investors, cannot be offered by general solicitation, and carry transfer restrictions designed to keep them within the professional market. Disclosure is still required to the investors and to the exchange, and misstatement liability applies.

Enterprise bonds, historically approved by the National Development and Reform Commission, were brought under CSRC review in 2023 as part of the State Council institutional reform, so most non-financial corporate bonds on the exchanges now follow a unified CSRC framework, while the NDRC retains a policy role on project-related financing.

Corporate bond rules require a bond trustee for public issues and many private ones, bondholders' meeting rules in the offering documents, continuous disclosure, and credit rating where required. Investor suitability rules separate bonds that may be sold to the public from those reserved for professional investors. The exchanges also run convertible bond markets for listed companies, which are governed by refinancing rules for listed issuers; see convertible and exchangeable bonds.

Issuance process and documentation

Onshore issuance is led by domestic underwriters, usually banks in the interbank market and securities firms on the exchanges, supported by PRC counsel, auditors and a rating agency where required. The issuer prepares an offering circular or prospectus, audited financial statements, a legal opinion and, for many products, a rating report, and the registration body reviews them through written feedback. Once registered, issuers can usually draw down in tranches within a validity period.

1. Planning: decide venue, product, size and tenor; confirm internal approvals required by the articles and, for state-owned issuers, by supervising bodies.
2. Appointments: lead underwriter, PRC counsel, auditor, rating agency and, where required, trustee.
3. Documentation: prospectus, audited accounts, rating report, legal opinion and bondholder meeting rules.
4. Registration: submission to NAFMII or the exchange, rounds of written feedback, registration notice.
5. Drawdown: bookbuilding, pricing against the government curve, allocation and settlement.
6. Continuing duties: periodic reports, use-of-proceeds disclosure, rating surveillance and event disclosures.

Documentation is standardised and governed by Chinese law, with far less negotiation of covenants than in offshore markets, although investor protection clauses such as cross-default, change-of-control puts and asset disposal restrictions are increasingly common. Offshore parents providing guarantees or keepwell support should check whether those arrangements create cross-border security registration requirements under foreign exchange rules.

An illustrative timeline

Consider a hypothetical foreign-invested manufacturer in Guangdong issuing its first medium-term notes. It spends the opening weeks choosing a lead bank, completing audits and obtaining an onshore rating. NAFMII review then proceeds through one or more rounds of written questions, often focusing on related-party dealings with the foreign parent, use of proceeds and the group's debt profile. Once registered, the company can issue its first tranche when market conditions suit and later tranches within the validity period. The longest lead item is usually not the regulator but the audited financial information and Chinese-language disclosure that onshore debt capital markets require.

State-owned and foreign-invested issuers

State-owned issuers must also follow internal approval requirements set by their supervising bodies, which can add a layer of process before the registration application. Foreign-invested issuers should check that the parent's own financing covenants permit onshore borrowing and any parent support, and that intra-group loans of proceeds comply with foreign exchange and transfer pricing rules.

Recent developments in onshore debt capital markets

Policy has steered the onshore bond markets toward technology and green finance. In May 2025 the PBOC and CSRC announced measures to support sci-tech innovation bonds in both the interbank and exchange markets, expanding eligible issuers to commercial banks, securities firms and financial asset investment companies as well as technology companies and equity investors.

Green bonds follow China's Green Bond Principles, and transition and sustainability-linked products are developing; see green and sustainable finance. For foreign investors, the Ministry of Finance and State Taxation Administration have extended the temporary exemption from corporate income tax and VAT on bond interest received by overseas institutions to 31 December 2027. Panda issuance by foreign issuers has also grown strongly, with outstanding panda bonds passing RMB 500 billion in July 2026 according to S&P Global (China) Ratings.

Credit rating reforms

Rating practice in onshore debt capital markets has been under reform for several years, with regulators reducing mandatory rating requirements for some products and pushing agencies to differentiate credit quality more clearly. A NAFMII notice requires rating agencies, from 1 August 2026, to publish and submit mappings between their onshore scales and international scales; reports from agencies that do not comply are not accepted for registration. International investors should still form their own credit view.

Foreign investor access to onshore debt capital markets

Overseas institutional investors can access onshore bonds directly in the interbank market (CIBM Direct), through Northbound Bond Connect from Hong Kong, or via the qualified foreign investor regime on the exchanges. Interest rate swaps can be accessed through Swap Connect. Funds movements are governed by the PBOC and SAFE rules on funds of overseas institutional investors in the bond market, effective 1 January 2023, which cover registration, dedicated accounts, currency matching and repatriation.

Hong Kong connectivity is discussed on our Hong Kong–Mainland market connectivity page. Investors from the US, the EU and ASEAN should also consider their home rules: sanctions screening of issuers, any US restrictions on securities of listed Chinese military-industrial complex companies, EU sustainable finance disclosure obligations for labelled holdings, and local investment limits on foreign-currency or emerging market exposure.

Worked example: an EU asset manager entering the market

A hypothetical EU asset manager wants exposure to Chinese government and policy bank bonds. It first decides between Bond Connect, which lets it trade through its existing Hong Kong custodian, and CIBM Direct, which requires an onshore settlement agent but offers wider hedging options. It then completes registration through the chosen channel, opens the required accounts and sets up currency hedging within the matching rules. Internally, it checks its fund documents permit the exposure, updates its EU sustainability disclosures if labelled bonds are held, and screens issuers against EU and other applicable sanctions lists. Only then does trading start in onshore debt capital markets.

Defaults, bondholder protection and choosing a market

Onshore defaults are handled through bondholders' meetings, the trustee or lead underwriter, negotiated extensions and exchange offers, and, where necessary, court proceedings or bankruptcy. Courts have issued guidance on bond dispute cases, and regulators expect issuers to disclose default risks promptly. Recent years have seen a large number of extension and restructuring transactions in property and local government-related issuers.

Investors holding both onshore and offshore debt of the same group face coordination questions; see distressed investment and defaulted bonds. Foreign holders should understand that onshore bondholders' meetings can bind dissenting holders by majority on many matters, and that the threshold and procedures are set in each bond's own meeting rules.

Checks before investing

• Read the bondholder meeting rules: voting thresholds, who can convene, and what can be amended by majority.
• Identify the trustee or representative and its powers.
• Check guarantees, collateral and any credit enhancement, and where they sit in the group.
• Review cross-default and change-of-control provisions.
• Understand the dispute resolution clause and forum.

Investors with exposure across several issuers in the same sector should also monitor event disclosures and rating actions systematically, because extension proposals in onshore debt capital markets often move quickly once a bondholders' meeting is called, leaving little time to organise a response.

Common mistakes

• Assuming offshore covenant packages can be replicated onshore; onshore templates are shorter and investor expectations differ.
• Underestimating the time needed for Chinese-language disclosure and audited figures that satisfy onshore requirements.
• Overlooking state-owned enterprise or group approval requirements until late in the process.
• Labelling bonds green or sci-tech without systems to track use of proceeds.
• For investors, relying on onshore ratings as if they mapped directly to international scales.

Onshore or offshore?

For Chinese groups, the choice between onshore debt capital markets and offshore bonds turns on funding currency, cost, the investor base and regulatory steps such as NDRC foreign debt registration. Foreign groups with Chinese operations can borrow renminbi onshore through panda bonds. Many issuers maintain programmes in both markets and manage covenants and disclosure consistently across them.

How TRW & Co helps

We help foreign investors, arrangers and multinational issuers understand how China's onshore debt capital markets operate and how they compare with offshore alternatives. We advise on access channels and investor-side documentation, on international market practice and on non-PRC law aspects of cross-border transactions, including guarantees, swaps and intercreditor arrangements, and we coordinate multi-market financing plans. Registration documents, PRC legal opinions and filings with NAFMII, the exchanges or the CSRC are prepared by licensed PRC law firms, with whom we work closely to keep transaction documents consistent across markets. To discuss an onshore financing, please contact us.