HONG KONG -- Borrowers from Kazakhstan are taking advantage of ultralow financing costs in the Chinese currency, joining a bond market boom as ties warm between Beijing and Central Asia's largest oil exporter.

Samruk-Kazyna, Kazakhstan's sovereign wealth fund, which manages more than $80 billion in assets, last week sold its first-ever dim sum bond, a term for bonds denominated in offshore yuan and marketed in Hong Kong. The sale was worth 3 billion yuan ($450 million).

The move followed a panda bond deal in April, in which the sovereign fund issued a three-year, 3 billion yuan note. Panda bonds are yuan bonds sold by foreign issuers in the Chinese domestic bond market.

Led by the government and other state-backed companies, Kazakh issuers have stepped up their fundraising efforts in the Chinese currency over the last year. In total, they have sold at least 26.5 billion yuan worth of dim sum and panda bonds since the first Kazakh-issued yuan bond in September 2025, according to Nikkei Asia's calculations based on public announcements. Nearly 17 billion yuan worth of such deals were completed in the last three months alone.

The deal rush comes as interest rates in China have hit record lows in recent years, reflecting the economy's slowing growth and deflation concerns. Foreign borrowers have pushed new deals in the panda bond market and Hong Kong's dim sum bond market to fresh highs this year.

Kazakh players' issuances are taking place as China becomes the Central Asian country's largest trade partner and Beijing pushes for more cross-border use of its currency. The result is a growing list of Kazakh sovereign and state-backed issuers tapping liquidity from mostly Chinese investors.

The Development Bank of Kazakhstan sold the country's debut yuan-denominated bond, a 2 billion yuan dim sum, in September 2025. Last month, KazMunayGas, Kazakhstan's state-owned oil and gas company, raised 3.5 billion yuan through its second dim sum bond sale in less than a year.

"Kazakhstan now borrows from three pools of money: dollars, onshore renminbi and offshore renminbi," said Assel Tolegen, head of corporate finance at Almaty-based investment bank Teniz Capital, referring to domestic and overseas yuan, which differ in how they are traded and regulated. She added that the institution has "several renminbi transactions in preparation before the end of the year." Teniz Capital said it has handled every renminbi transaction on the Kazakh side placed locally this year.

According to Tolegen, a key rationale for Kazakh companies to take on yuan debt is that they have to pay for imports from China, including purchases from Chinese suppliers or projects involving Chinese contractors or partners.

The two countries have announced plans to establish a joint investment fund to attract financing for major joint projects. According to a local media report, Kazakhstan has established a portfolio of 260 major projects with China valued at more than $62 billion. In May, construction began on a $100 million copper processing plant in Aktobe that is partly backed by Beijing Jinyi Yuanfang Holding Group.

Borrowing in yuan can also lower the cost of debt servicing for companies. Samruk-Kazyna last tapped the bond market in 2021, when U.S. interest rates were still at a historical low, for a $500 million, five-year dollar note at a 2% coupon rate. The note matures on Oct. 28. Samruk-Kazyna priced its three-year and five-year dim sum bond tranches at coupon rates of 2.15% and 2.3%. That is significantly lower than the rates it would have to pay to issue equivalent dollar bonds now.

Currently, the market yield for U.S. three-year Treasury bonds, a commonly used benchmark for investment-grade dollar bond issuances, is around 4.85%, more than double the coupon on Samruk-Kazyna's new dim sum bond.

Samruk-Kazyna and its dim sum bond are both rated Baa1 by Moody's, placing them at the lowest tier of investment-grade debt. This means investors would expect a dollar bond from the sovereign wealth fund to pay a higher interest rate than U.S. Treasuries.

"We experienced substantial demand from investors," said Alex Shupletsov, managing director at Guotai Junan International, one of the investment banks leading Samruk-Kazyna's dim sum bond deal. "The book was oversubscribed around three times. Major contributors were Chinese offshore and onshore banks, financial institutions, and international fund managers.

They also drew interest from sovereign wealth funds and pension funds." The fund's April panda bond was sold at a record low coupon rate of 2.18%, according to a company statement. The bond was assigned a "AAA" rating by a unit of China's largest domestic rating agency, China Chengxin International Credit Rating.

Tolegen noted that panda bond market rates are "10 to 30 basis points cheaper" than dim sum bond rates for equivalent issuances. But "the panda bond market is not for everyone" due to local regulations, such as the requirement for a Chinese prospectus, she said. Foreign investors also have very limited participation in the domestic market.

"Kazakhstan's credit rating is among the highest in Central Asia. That makes its debt attractive for some emerging-market investors," said a Hong Kong-based debt capital market banker.

In September, the Development Bank of Kazakhstan sold a 2.7 billion yuan dim sum note that drew investor orders worth over 25 billion yuan, or 10 times the size of the issuance, signaling heightened enthusiasm. The investors were dominated by Asians, and around 41% were banks, while another 40% were from asset managers, insurers or pension funds, according to a person familiar with the matter.

"As of today, the Chinese yuan issues pipeline is not significant compared to the Eurobond pipeline," said Tolegen, comparing the yuan bonds with the international debt market used by Kazakh issuers. "But we see that in the future -- in three, five years -- it will be significant."