UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                            FORM 10-Q

(Mark One)
[X]  QUARTERLY  REPORT PURSUANT TO SECTION 13  OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended September 30, 1997

                                   OR

[  ] TRANSITION  REPORT PURSUANT TO SECTION 13 OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934
     For the transition period from __________ to __________.

               Commission File Number 333-14495-01
                                
                                
                 PANDA INTERFUNDING CORPORATION
     (Exact name of registrant as specified in its charter)

          Delaware                             75-2660915
     (State or other jurisdiction of         (IRS Employer
       incorporation   or  organization)     Identification
Number)

    4100 Spring Valley Road, Suite 1001, Dallas, Texas 75244
  (Address of principal executive offices, including zip code)
                                
                         (972) 980-7159
      (Registrant's telephone number, including area code)

                                             None
 (Former name, former address and former fiscal year, if changed
                       since last report)
                                
Indicate  by check mark whether the registrant (1) has filed  all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.   Yes  X      No

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of November 11, 1997.

     Common Stock, Par Value $.01 Per Share            1,000



                 PART I - FINANCIAL INFORMATION


                                                           Page

Item 1.   Financial Statements (Unaudited)                  F-1


Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations     1


                   PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                  6






                         PANDA INTERFUNDING CORPORATION
                                AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                                                                      (Unaudited)
                                                                                             December 31              September 30
                                                                                                 1996                     1997
                                                                                             -------------            -------------
<S>                                                                                          <C>                      <C>          
Current assets:
  Cash and cash equivalents ......................................................           $     828,797            $   2,996,357
  Restricted cash - current ......................................................              17,809,921               16,867,247
  Accounts receivable ............................................................               9,402,685                8,559,518
  Fuel oil, spare parts and supplies .............................................               7,913,777                5,988,990
  Other current assets ...........................................................                 164,905                  310,912
                                                                                             -------------            -------------
    Total current assets .........................................................              36,120,085               34,723,024

Plant and equipment:
  Electric generating facilities .................................................             288,716,711              290,862,770
  Furniture and fixtures .........................................................                 494,418                  501,392
  Less: accumulated depreciation .................................................             (26,539,539)             (35,386,467)
                                                                                             -------------            -------------
    Total plant and equipment, net ...............................................             262,671,590              255,977,695

Restricted cash - debt service reserves and escrow deposits ......................              31,799,366               31,589,305

Debt issuance costs, net of accumulated
  amortization of $165,015 and $494,519 respectively .............................               7,570,521                7,388,670
                                                                                             -------------            -------------
                                                                                             $ 338,161,562            $ 329,678,694
                                                                                             =============            =============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-1




<PAGE>
             PANDA INTERFUNDING CORPORATION
                    AND SUBSIDIARIES
          CONDENSED CONSOLIDATED BALANCE SHEETS



          LIABILITIES AND SHAREHOLDER'S DEFICIT
<TABLE>
<CAPTION>
                                                                                                                      (Unaudited)
                                                                                          December 31                 September 30
                                                                                              1996                         1997
                                                                                         -------------                -------------
<S>                                                                                      <C>                          <C>        
Current liabilities:
  Accounts payable and accrued expenses:
    Construction costs ...................................................               $     660,167                $        --
    Interest and letter of credit fees ...................................                   6,297,558                    2,474,417
    Operating expenses and other .........................................                   6,991,796                    5,801,289
  Current portion of long-term debt ......................................                   5,717,623                    5,711,478
                                                                                         -------------                -------------
      Total current liabilities ..........................................                  19,667,144                   13,987,184

Deferred revenue .........................................................                        --                     13,223,856

Long term debt, less current portion .....................................                 209,830,918                  205,494,563

Capital lease obligation .................................................                 217,488,645                  228,408,012

Commitments and contingencies (Note 3)

Shareholder's deficit:
  Common stock, $.01 par value; 1,000 shares
     authorized, issued and outstanding ..................................                          10                           10
  Advances to parent .....................................................                 (63,033,590)                 (68,105,364)
  Accumulated deficit ....................................................                 (45,791,565)                 (63,329,567)
                                                                                         -------------                -------------
      Total shareholder's deficit ........................................                (108,825,145)                (131,434,921)
                                                                                         -------------                -------------
                                                                                         $ 338,161,562                $ 329,678,694
                                                                                         =============                =============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-2




<PAGE>
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                                    1996                    1997
                                                                                               ------------            ------------
<S>                                                                                            <C>                     <C>         
Revenue:
  Electric capacity and energy sales ...............................................           $ 21,495,843            $ 48,346,898
  Steam and chilled water sales ....................................................                388,119                 439,042
  Interest income ..................................................................                611,242               1,887,951
                                                                                               ------------            ------------
                                                                                                 22,495,204              50,673,891
                                                                                               ------------            ------------
Expenses:
  Plant operating expenses .........................................................              7,813,737              20,867,693
  Project development and administrative ...........................................              1,260,884               5,745,683
  Interest expense and letter of credit fees .......................................             11,095,941              32,422,084
  Depreciation .....................................................................              3,159,659               8,846,929
  Amortization of debt issuance costs ..............................................                394,781                 329,504
  Amortization of partnership formation costs ......................................                399,826                    --
                                                                                               ------------            ------------
                                                                                                 24,124,828              68,211,893
                                                                                               ------------            ------------
Loss before minority interest and extraordinary item ...............................             (1,629,624)            (17,538,002)

  Minority interest ................................................................             (2,405,160)                   --
                                                                                               ------------            ------------
Loss before extraordinary item .....................................................             (4,034,784)            (17,538,002)

  Extraordinary item - loss on early extinguishment of debt ........................            (21,336,550)                   --
                                                                                               ------------            ------------
Net loss ...........................................................................           $(25,371,334)           $(17,538,002)
                                                                                               ============            ============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-3




<PAGE>
                         PANDA INTERFUNDING CORPORATION
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                   1996                    1997
                                                                                               ------------            ------------
<S>                                                                                            <C>                       <C>       
Revenue:
  Electric capacity and energy sales ...............................................           $  6,936,940              16,060,659
  Steam and chilled water sales ....................................................                125,117                 154,739
  Interest income ..................................................................                224,416                 547,015
                                                                                               ------------            ------------
                                                                                                  7,286,473              16,762,413
                                                                                               ------------            ------------
Expenses:
  Plant operating expenses .........................................................              2,752,391               7,238,987
  Project development and administrative ...........................................                 68,225               1,933,163
  Interest expense and letter of credit fees .......................................              4,726,187              10,834,159
  Depreciation .....................................................................              1,053,220               2,949,025
  Amortization of debt issuance costs ..............................................                112,966                 111,529
  Amortization of partnership formation costs ......................................                133,276                    --
                                                                                               ------------            ------------
                                                                                                  8,846,265              23,066,863
                                                                                               ------------            ------------
Loss before minority interest and extraordinary item ...............................             (1,559,792)             (6,304,450)

  Minority interest ................................................................               (499,077)                   --
                                                                                               ------------            ------------
Loss before extraordinary item .....................................................             (2,058,869)             (6,304,450)

  Extraordinary item - loss on early extinguishment of debt ........................            (21,336,550)                   --
                                                                                               ------------            ------------
Net loss ...........................................................................           $(23,395,419)           $ (6,304,450)
                                                                                               ============            ============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-4




<PAGE>
                         PANDA INTERFUNDING CORPORATION
                                AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S DEFICIT
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                    Common Stock                                                         Total
                                            -------------------------------       Advances          Accumulated      Shareholder's
                                                Shares            Amount          to Parent           Deficit           Deficit
                                            -------------     -------------     -------------      -------------      -------------
<S>                                         <C>               <C>               <C>                <C>                <C>           
BALANCE,  January 1, 1997 .............             1,000     $          10     $ (63,033,590)     $ (45,791,565)     $(108,825,145)

  Advances to parent ..................              --                --          (5,071,774)              --           (5,071,774)

  Net loss ............................              --                --                --          (17,538,002)       (17,538,002)
                                            -------------     -------------     -------------      -------------      -------------
BALANCE,  September 30, 1997 ..........             1,000     $          10     $ (68,105,364)     $ (63,329,567)     $(131,434,921)
                                            =============     =============     =============      =============      =============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-5



<PAGE>
                        PANDA INTERFUNDING CORPORATION
                               AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997

                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                 1996                     1997
                                                                                             -------------            -------------
<S>                                                                                          <C>                      <C>           
Operating activities:
  Net loss .......................................................................           $ (25,371,334)           $ (17,538,002)
  Adjustments to reconcile net loss to
    net cash provided by operating activities:
      Loss on early extinguishment of debt .......................................              21,336,550                     --
      Minority interest ..........................................................               2,405,160                     --
      Depreciation ...............................................................               3,159,659                8,846,929
      Amortization of debt issuance costs ........................................                 394,781                  329,504
      Amortization of partnership formation costs ................................                 399,826                     --
      Amortization of loan discount and deferred interest ........................                 391,491               16,140,385
  Changes in assets and liabilities:
    Accounts receivable ..........................................................              (2,079,293)                 843,167
    Fuel oil, spare parts and supplies ...........................................                (159,380)               1,924,787
    Other current assets .........................................................                 (14,525)                (146,007)
    Accounts payable and accrued expenses ........................................               3,095,742               (5,013,649)
                                                                                             -------------            -------------
      Net cash provided (used) by operating activities ...........................               3,558,677                5,387,114
                                                                                             -------------            -------------
Investing activities:
  Restricted cash - current ......................................................              (2,920,820)                 942,674
  Acquisition of minority interest ...............................................             (34,700,000)                    --
  Additions to property, plant and equipment .....................................             (55,332,280)              (2,813,200)
  Restricted cash - debt service reserves and escrow deposits ....................             (18,886,349)                 210,061
                                                                                             -------------            -------------
      Net cash provided (used) by investing activities ...........................            (111,839,449)              (1,660,465)
                                                                                             -------------            -------------
Financing activities:
  Distributions to minority interest owner .......................................              (1,152,113)                    --
  Advances (to) from parent ......................................................             (31,887,353)              (5,071,774)
  Deferred revenue ...............................................................                    --                 13,223,856
  Proceeds from long term debt ...................................................             275,933,627                     --
  Repayment of long term debt ....................................................            (127,038,813)              (4,342,500)
  Repayment of capital lease obligation ..........................................                    --                 (5,221,018)
  Debt issuance costs ............................................................              (6,957,135)                (147,653)
                                                                                             -------------            -------------
      Net cash provided (used) by financing activities ...........................             108,898,213               (1,559,089)
                                                                                             -------------            -------------
Increase (decrease) in cash and cash equivalents .................................                 617,441                2,167,560

Cash and cash equivalents, beginning of period ...................................               1,160,096                  828,797
                                                                                             -------------            -------------
Cash and cash equivalents, end of period .........................................           $   1,777,537            $   2,996,357
                                                                                             =============            =============
Noncash operating and financing activities:

  Interest expense on capital lease obligation ...................................           $        --              $  16,140,385
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                      F-6







                 PANDA INTERFUNDING CORPORATION
                                
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      For the Nine Months Ended September 30, 1996 and 1997


1. ORGANIZATION AND BASIS OF PRESENTATION

      Panda Interfunding Corporation ("PIC", or collectively with
its  subsidiaries  the "Company"), a wholly owned  subsidiary  of
Panda Energy Corporation ("PEC"), which in turn is a wholly owned
subsidiary  of  Panda Energy International,  Inc.  ("PEII"),  was
formed  in  July  1996  to hold the ownership  interests  in  two
independent power projects which were formerly owned by PEC.  The
ownership  interests  were transferred to the  Company  at  PEC's
historical cost.  Because the transfers occurred between entities
under common control, the transactions have been accounted for in
a manner similar to a pooling of interests.

      PIC, through its wholly owned subsidiary Panda Interholding
Corporation  ("Interholding"),  holds  the  Company's   ownership
interests  in  the  Rosemary project and the Brandywine  project.
Because  Interholding  has no independent operations  other  than
holding  the  ownership interests in the Rosemary and  Brandywine
projects,  Interholding (collectively with its  subsidiaries)  is
considered  the predecessor entity of the Company.  The  entities
holding  such  ownership interests include the following:   Panda
Rosemary  Corporation ("PRC"), a 91% general  partner  in  Panda-
Rosemary, L.P. ("Panda-Rosemary"); PRC II Corporation ("PRC II"),
a   9%   limited  partner  in  Panda-Rosemary;  Panda  Brandywine
Corporation,  a  50%  general partner in  Panda-Brandywine,  L.P.
("Panda-Brandywine");  Panda  Energy  Corporation   (a   Delaware
corporation),  a  50%  limited partner in  Panda-Brandywine;  and
Brandywine  Water Company.  The Company, through its general  and
limited  partnership interests, owns 100% of  Panda-Rosemary  and
Panda-Brandywine.  Prior to July 31, 1996, the Company owned  10%
of  Panda-Rosemary.   The  Rosemary and Brandywine  projects  are
located  in  the United States.  Other direct or indirect  wholly
owned  subsidiaries  of  PIC include  Panda  Funding  Corporation
("PFC"),  Panda-Rosemary Funding Corporation ("PRFC")  and  Panda
Cayman  Interfunding Corporation ("PIC Cayman"), which have  been
formed  to  facilitate  the  financing  of  the  development  and
acquisition of independent power projects.

      All  material  intercompany accounts and transactions  have
been eliminated in consolidation.


2. SIGNIFICANT ACCOUNTING POLICIES

      The accompanying unaudited condensed consolidated financial
statements  have  been  prepared  in  accordance  with  generally
accepted  accounting principles and should be read in conjunction
with the audited financial statements for the year ended December
31,  1996.  The  accompanying  unaudited  condensed  consolidated
financial statements for the three- and nine-month periods  ended
September  30, 1996 and 1997 include all adjustments,  consisting
of   normal   recurring  accruals,  which  management   considers
necessary for a fair presentation of the results for the  interim
periods.  The results of operations for the three- and nine-month
periods  ended September 30, 1997 are not necessarily  indicative
of  the results that may be expected for the year ending December
31,  1997.  The  amounts presented in the  balance  sheet  as  of
December  31,  1996  were  derived  from  the  Company's  audited
consolidated financial statements.

                           F-7



     Allocation of Administrative Costs  -- PEII performs certain
accounting,  legal, insurance, and consulting  services  for  the
Company.  These  general and administrative costs  are  generally
allocated  to  the  Company using the  percentage  of  time  PEII
personnel spent performing these services. The expenses allocated
were  $946,000 and $1,612,000 for the nine months ended September
30,  1996  and 1997, respectively, and were $392,000 and $557,000
for   the  three  months  ended  September  30,  1996  and  1997,
respectively.   The  allocated expenses are included  in  project
development  and  administrative expenses  in  the  statement  of
operations. Management believes the method used to allocate these
costs is reasonable.

      Deferred  revenue  -- Revenue from the sale  of  rights  to
future  interest income from certain of the Company's  restricted
cash  accounts  (debt  service reserves and escrow  deposits)  is
deferred and recognized as interest revenue over the lives of the
related debt obligations.

3.  COMMITMENTS AND CONTINGENCIES

      In connection with a previous borrowing from Nova Northwest
Inc.  ("Nova"), Nova received a cash flow participation  interest
in  the  distributions from the Rosemary Project for the term  of
the    Panda-Rosemary   L.P.   partnership    agreement.     Such
participation  interest amounted to 4.33% of  the  Company's  own
participation  interest, which was 10% at the time the  agreement
was  entered  into.   The Company has filed an  action  with  the
District  Court  of  Dallas County, Texas seeking  a  declaratory
judgment  that  Nova's cash flow participation is 0.433%  of  the
Company's   100%   interest  after   the   acquisition   of   the
institutional   investor's  90%  limited  partnership   interest.
Management believes that the resolution of this dispute will  not
have  a  material  effect on the financial position,  results  of
operations or cash flows of the Company.  PEII and Nova each have
the   option   to  convert  the  present  value  of   cash   flow
participation, as defined by the agreement, to PEII common  stock
at $6 a share.

       In  August  1996,  Panda-Brandywine  and  PEPCO  commenced
discussions concerning commercial operational requirements of the
Brandywine  Project  and conversion of the construction  loan  to
long-term  financing  in  the form  of  a  lease.   During  these
discussions,  disagreements  arose between  Panda-Brandywine  and
PEPCO  with respect to certain provisions of the Brandywine Power
Purchase  Agreement  which  relate to the  determination  of  the
interest  rate  that  is  the  basis for  reduction  in  capacity
payments  thereunder (the "PEPCO Interest Rate Dispute").   PEPCO
and  Panda-Brandywine are presently attempting to  resolve  these
disagreements but there are no assurances that such efforts  will
be  successful.  If the PEPCO Interest Rate Dispute is determined
adversely  to  Panda-Brandywine, the capacity  payments  paid  by
PEPCO  under  the  Brandywine  Power  Purchase  Agreement  (which
commenced   in  January  1997)  will  be  less  than   originally
anticipated, thereby adversely affecting the revenues realized by
Panda-Brandywine, and consequently, reducing the amount of  funds
that would be available for distribution to the Company.

                         F-8



      Raytheon  Engineers  and  Constructors,  Inc.  ("Raytheon")
constructed  the  Brandywine Project pursuant to  a  fixed-price,
turnkey  engineering, procurement and construction contract  (the
"Brandywine  EPC  Agreement")  with  Panda-Brandywine.   Raytheon
completed the construction and start-up of the Brandywine Project
and  has  met  the  requirements for  commercial  operations  and
substantial  completion  under  the  Brandywine  EPC   Agreement,
although  the  date on which commercial operations were  achieved
and  the  entitlement  of  Raytheon to certain  early  completion
bonuses under the Brandywine EPC Agreement are the subject  of  a
dispute  between  Panda-Brandywine  and  Raytheon.   The  Company
estimates that the amount in dispute is less than $1 million  and
believes  that  the resolution of this dispute will  not  have  a
material  adverse effect upon the financial position, results  of
operations or cash flows of the Company.

     The Company has entered into various long-term contracts for
the  purchase  and transportation of fuel subject to  termination
only  in  certain  limited circumstances.  These  contracts  have
remaining  terms  of  10  to  25 years.   The  Company's  minimum
purchase commitment under these contracts is 2.3 million  British
thermal  units  of  gas annually from October  31,  1996  through
October 31, 2011.  In the aggregate, such commitments are not  at
prices in excess of the current market.

      PEII  is  also  involved in other legal and  administrative
proceedings  in  the  ordinary  course  of  business.  Management
believes  that the amount of ultimate liability with  respect  to
these  matters  will not have a material affect on the  financial
position, results of operations or cash flows of the Company.

                            F-9



Management's Discussion and Analysis of Financial Condition
and Results of Operations

   (Dollar amounts are in thousands unless otherwise noted)

General

      The  financial statements included in this  Form  10-Q
include  the  consolidated  financial  statements  of  Panda
Interfunding  Corporation ("PIC", or collectively  with  its
subsidiaries  the  "Company").   The   financial  statements
reflect  the  financial  data  of  the  entities  that  held
partnership  interests  in   Panda-Rosemary,  L.P.  ("Panda-
Rosemary")  and  Panda-Brandywine, L.P. ("Panda-Brandywine")
(collectively the "Project Entities", which own the Rosemary
Facility  and  the  Brandywine  Facility,  respectively,  as
described  in  the following paragraph) during  the  periods
presented.   In July 1996, these partnership interests  were
transferred to Panda Interholding Corporation ("Interholding"),
which  is  a  wholly   owned subsidiary  of  PIC,  by PIC's
parent and  recorded  at  the parent's   historical  cost.
PIC  and  Interholding   were incorporated  in July 1996 and
were not in existence during the  first six  months of 1996;
however, the entities  that currently  own  such partnership
interests are  wholly-owned subsidiaries  of  PIC  and 
Interholding.   Thus,  references herein  to financial data 
of the Company are for convenience of  reference,  and it 
should be understood  that  all  such references are to the 
financial information of the  entities that  held  such
interests during  the  periods  presented.  Because   such 
entities   are   direct   subsidiaries   of Interholding,
Interholding is considered the predecessor  of the Company.

     The Company owns 100% equity interests in two completed
electric  power generation facilities in the United  States:
the Rosemary Facility, which began commercial operations  in
December  1990,  and  the Brandywine Facility,  which  began
commercial  operations in October 1996.  Prior to  July  31,
1996,  the  Company  owned  a 10%  equity  interest  in  the
Rosemary Facility.

Results of Operations

      The  Company's revenues from electric power generation
are  derived from long-term contracts which include  both  a
fixed  capacity payment and a variable energy payment.   The
capacity payments, which are based upon the specified  power
generating  capacity  of a project, are  designed  to  cover
fixed  costs and to provide an acceptable return on  equity.
The  energy  payments, which are based on actual electricity
output, are designed to cover variable costs including  fuel
costs and variable operating expenses incurred in connection
with  electricity output.  Accordingly, the impact of  price
fluctuations  on the results of operations is generally  not
material.   The  extent  to which a facility  is  dispatched
(i.e.,  required to deliver electricity), and therefore  the
actual electricity output for a given period, are subject to
the   discretion  of  the  power  purchaser,  with   certain
limitations.   The  capacity payments  are  the  predominant
source  of  revenue for the Company.  The Company  currently
believes that it can meet its liquidity requirements  solely
from  the  capacity payments in the unlikely event that  its
facilities  are  not dispatched at all.  See "Liquidity  and
Capital Resources."

                          -1-



  Third Quarter 1997 compared to 1996

      The Company recorded a net loss of $6,304 in the third
quarter of 1997 on revenues of $16,762 compared to net  loss
(before minority interest and extraordinary item) of  $1,560
on  revenues of $7,286 during the same period in 1996.   The
increase in revenues in the 1997 period was primarily caused
by operations of the Brandywine Facility (which commenced on
October  31, 1996), supplemented by an increase in  revenues
at  the Rosemary Facility, and by increased interest income.
The 1997 period reflects operations of both the Rosemary and
Brandywine facilities, whereas the 1996 period includes only
the  Rosemary  Facility.  For the  1997  and  1996  periods,
capacity revenues for the Rosemary Facility were $5,768  and
$6,182,  respectively, reflecting a contractual decrease  of
$414. Energy revenues for the Rosemary Facility for the 1997
and  1996  periods were $1,463 and $756, respectively.   The
increase  in  energy revenues for the Rosemary  Facility  is
attributable  to  higher  dispatch hours  at  that  facility
compared  to the 1996 period.  During the third  quarter  of
1997,  the  Rosemary Facility was dispatched  478  hours  as
compared to 223 hours in the 1996 period.  Capacity revenues
and  energy revenues from Potomac Electric Power Company for
the  Brandywine Facility for the third quarter of 1997  were
$5,003  and  $3,780, respectively.  The Brandywine  Facility
was  dispatched 976 hours during this period.  Additionally,
the  Company  had energy revenues of $46 from  the  sale  of
natural gas  to other purchasers.  Plant operating expenses,
which included fuel cost, operation and maintenance expense,
insurance and property taxes, increased (as a percentage  of
revenues)  to  $7,239 (43% of revenues) in the  1997  period
from  $2,752  (38%  of revenues) in 1996, primarily  due  to
higher operating costs at the Brandywine Facility, which had
not yet commenced operations in the third quarter of 1996.

      Project  development and administrative expenses  were
$1,933  (12% of revenues) and $68 (1% of revenues)  for  the
1997  and 1996 periods, respectively.  The increase in  1997
was  primarily  attributable  to  additional  administrative
activities   related  to  the  commencement  of   commercial
operations   at   the   Brandywine   Facility   and   higher
administrative costs required to support the increased  size
and  complexity of the Company's operations.  Also, the 1996
amount  was  lower than normal due to correction of  certain
accruals  in the third quarter of that year, the  effect  of
which was to reduce expense by approximately $200.

     Interest expense increased to $10,834 (65% of revenues)
in  the 1997 period from $4,726 (65% of revenues) in 1996 as
a  result  of the increase in outstanding indebtedness  from
the issuance of $111.4 million original principal amount  of
first   mortgage  bonds  for  the  Rosemary  Facility   (the
"Rosemary Bonds"),  $105.5 million original principal amount
of  pooled project bonds ("Series A Bonds"), and the capital
lease financing for the Brandywine Facility.  The impact  of
such   new   indebtedness  was  partially  offset   by   the
refinancing of the taxable revenue bonds issued in 1989  for
the  Rosemary Facility and the repayment of other term  loan
financing on July 31, 1996 from portions of the proceeds  of
the Rosemary Bonds and the Series A Bonds.

      Depreciation,  amortization of debt  issue  costs  and
amortization  of  partnership formation  costs  amounted  to
$3,061 (18% of revenues) in the 1997 period and $1,299  (18%
of   revenues)   in  1996.   The  increase   was   primarily
attributable to depreciation for the Brandywine Facility  in
1997.

                          -2-



      For  the 1996 period, minority interest in net  income
was  $499.  There is no minority interest in 1997 due to the
Company's  acquisition  on July 31,  1996  of  the  minority
interest  holder's  limited partnership interest  in  Panda-
Rosemary. As a result of this acquisition, the Company  owns
100% of Panda-Rosemary.

       For   the  1996  period,  the  Company  incurred   an
extraordinary  loss  on  early  extinguishment  of  debt  of
$21,337  as  a  result  of the refinancing  of  the  taxable
revenue  bonds issued in 1989 for the Rosemary Facility  and
the  repayment of other term loan financing on July 31, 1996
from portions of the proceeds of the Rosemary Bonds and  the
Series A Bonds.

     As a result of the various factors discussed above, the
Company  recorded net losses of $6,304 and $23,395  for  the
1997 and 1996 periods,  respectively.


     First Nine Months of 1997 compared to 1996

     The Company recorded a net loss of $17,538 in the first
nine  months of 1997 on revenues of $50,674 compared to  net
loss  before  minority  interest and extraordinary  item  of
$1,630  on  revenues of $22,495 during the  same  period  in
1996.   The  increase  in revenues in the  1997  period  was
primarily  caused  by operations of the Brandywine  Facility
(which commenced on October 31, 1996), partially offset by a
decrease  in  revenues  at  the Rosemary  Facility,  and  by
increased   interest  income.   The  1997  period   reflects
operations  of both the Rosemary and Brandywine  facilities,
whereas the 1996 period includes only the Rosemary Facility.
For  the  1997 and 1996 periods, capacity revenues  for  the
Rosemary  Facility  were $18,438 and $19,781,  respectively,
reflecting a contractual decrease of $1,343. Energy revenues
for the Rosemary Facility for the 1997 and 1996 periods were
$2,302  and  $1,715, respectively.  The increase  in  energy
revenues for the Rosemary Facility is attributable to higher
dispatch hours at that facility compared to the 1996 period.
During  the first nine months of 1997, the Rosemary Facility
was  dispatched 720 hours as compared to 490  hours  in  the
1996  period.   Capacity revenues and energy  revenues  from
Potomac  Electric Power Company for the Brandywine  Facility
for  the  first nine months of 1997 were $15,038 and $8,831,
respectively.  The Brandywine Facility was dispatched  2,685
hours  during  this period.  Additionally, the  Company  had
energy  revenues of $3,738 from the sale of natural gas  and
fuel  oil  to  other purchasers in the 1997  period.   Plant
operating expenses, which included fuel cost, operation  and
maintenance expense, insurance and property taxes, increased
to  $20,868 (41% of revenues) in the 1997 period from $7,814
(35%  of  revenues) in 1996, primarily due to lower  margins
obtained  on the sale of natural gas and fuel oil  to  other
purchasers.

      Project  development and administrative expenses  were
$5,746 (11% of revenues) and $1,261 (6% of revenues) for the
1997  and 1996 periods, respectively.  The increase in  1997
was  primarily  attributable  to  additional  administrative
activities   related  to  the  commencement  of   commercial
operations   at   the   Brandywine   Facility   and   higher
administrative costs required to support the increased  size
and complexity of the Company's operations.

     Interest expense increased to $32,422 (64% of revenues)
in the 1997 period from $11,096 (49% of revenues) in 1996 as
a  result  of the increase in outstanding indebtedness  from
the issuance of $111.4 million original principal amount  of
first   mortgage  bonds  for  the  Rosemary  Facility   (the
"Rosemary Bonds"),  $105.5 million original principal amount
of  pooled project bonds ("Series A Bonds"), and the capital
lease financing for the Brandywine Facility.  The impact  of
such   new   indebtedness  was  partially  offset   by   the
refinancing of the taxable revenue bonds issued in 1989  for
the  Rosemary Facility and the repayment of other term  loan
financing on July 31, 1996 from portions of the proceeds  of
the Rosemary Bonds and the Series A Bonds.

                        -3-



      Depreciation,  amortization of debt  issue  costs  and
amortization  of  partnership formation  costs  amounted  to
$9,176 (18% of revenues) in the 1997 period and $3,954  (18%
of   revenues)   in  1996.   The  increase   was   primarily
attributable to depreciation for the Brandywine Facility  in
1997.

      For  the 1996 period, minority interest in net  income
was  $2,405.  There is no minority interest in 1997  due  to
the  Company's acquisition on July 31, 1996 of the  minority
interest  holder's  limited partnership interest  in  Panda-
Rosemary. As a result of this acquisition, the Company  owns
100% of Panda-Rosemary.

       For   the  1996  period,  the  Company  incurred   an
extraordinary  loss  on  early  extinguishment  of  debt  of
$21,337  as  a  result  of the refinancing  of  the  taxable
revenue  bonds issued in 1989 for the Rosemary Facility  and
the  repayment of other term loan financing on July 31, 1996
from portions of the proceeds of the Rosemary Bonds and  the
Series A Bonds.

     As a result of the various factors discussed above, the
Company  recorded net losses of $17,538 and $25,371 for  the
1997 and 1996 periods,  respectively.

Liquidity and Capital Resources

      To date, the Company has obtained cash from operations
of  the  Rosemary  Facility  and  the  Brandywine  Facility,
borrowings under non-recourse project debt of Panda-Rosemary
and  Panda-Brandywine, an equity contribution by Ford  Motor
Credit  Company ("Ford")(a former minority interest  partner
in  Panda-Rosemary),  senior indebtedness  issued  to  Trust
Company of the West, and the issuance of the Rosemary  Bonds
and  the Series A Bonds.  The Company utilized this cash  to
refinance   the   project  debt  of   Panda-Rosemary,   fund
development  and  construction of the  Brandywine  Facility,
service  its  debt  obligations, make distributions  to  its
parent  to fund project development efforts, and for general
and  administrative  expenses.  Additionally,  on  July  31,
1996, the Company repaid all outstanding senior indebtedness
to  Trust Company of the West and purchased Ford's remaining
limited partnership interest in Panda-Rosemary.

      The  principal future cash requirement of the  Company
will  be  the payment of its obligations under the Series  A
Bonds.   Semi-annual principal and interest payments on  the
Series A Bonds totaled $7.0 million in the first quarter  of
1997  and  are  expected to total $6.1 million  on  each  of
August  20 and February 20 through February 20, 1999,  after
which   time  scheduled  payments  will  increase  as   more
significant  principal amortization begins.  The  amount  of
principal payments generally increases over time.

                              -4-



       The   Company   will  rely  almost   exclusively   on
distributions  from the Project Entities to  meet  its  cash
requirements.  The Project Entities' ability  to  make  such
distributions will depend upon the financial performance  of
the  Rosemary Facility and the Brandywine Facility and  will
be  subject  to  a  number of limitations  on  distributions
contained in the project-level debt agreements.  The Company
currently  believes  that it will have sufficient  liquidity
from  the  cash  flows available for distribution  from  the
Project Entities, together with amounts held in debt service
reserves and other restricted cash reserves, to satisfy  its
obligations.

     The Project Entities are dependent on capacity payments
under  their  respective power purchase agreements  to  meet
their  fixed obligations, including payment of project-level
debt  service,  and to make distributions  to  the  Company.
Capacity  payments  can be adversely  affected  by  a  major
equipment failure, resulting in a facility being unavailable
for  dispatch  for  an extended period  of  time.   Capacity
payments  can  also  be  subject to  reduction  pursuant  to
regulatory  disallowance and, under contractual  provisions,
as  a  result  of events outside the Company's control.   In
1997,  1999 and 2006, the capacity payments for the Rosemary
Facility  are  scheduled to decrease by  approximately  $1.8
million   (6.7%),  $1.8  million  (7.1%)  and  $5.4  million
(23.1%),  respectively,  based  on  the  facility's  current
capacity  rating.  The capacity payments for the  Brandywine
Facility,  which commenced in 1997, are subject to specified
downward   adjustments  in  1998  and   2000,   and   upward
adjustments  in  2001 and 2007 through  2021.   The  Company
currently believes it will be able to continue to  meet  its
obligations   during   the  periods  such   reductions   are
applicable.

      Each of the electric energy purchasers under the power
purchase  agreements  for  the  Rosemary  Facility  and  the
Brandywine Facility has a contractual right to schedule  the
facility for dispatch largely at the purchaser's discretion.
Thus,  revenues from energy payments will vary depending  on
the   hours   these  facilities  are  dispatched   by   such
purchasers.  The Company currently believes that it can meet
its liquidity requirements solely from the capacity payments
in   the  unlikely  event  that  these  facilities  are  not
dispatched at all.

Impact of Inflation

       Inflationary   increases  in  the  Company's   costs,
primarily  project  development  costs,  energy  costs,  and
capital  costs,  may be offset by increases  in  revenue  as
provided   in  the  various  purchase  agreements,  although
competition may limit the Company's ability to fully recover
all  such  increases.  The Company attempts, where possible,
to  obtain  provisions  in  its  power  purchase  agreements
whereby certain revenue components, such as energy payments,
may  be  adjusted with inflationary increases.  The  Company
currently  believes that inflation will not have a  material
adverse  effect on the Company's financial position, results
of operations or cash flows in the foreseeable future.

                         -5-









                   PART II - OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K

     (a)  The following exhibits are filed as part of this
          Quarterly Report on Form 10-Q:


Exhibit
Number    Exhibit Description

27.01     Financial Data Schedule.*

* Filed herewith.


     (b)  The registrant did not file any reports on Form 8-K
          during the quarter for which this report is filed.
  
                              -6-
  
  
  
  
  
  
                           SIGNATURES
  
  
Pursuant  to the requirements of the Securities Exchange  Act  of
1934, the registrant has duly caused this report to be signed  on
its behalf by the undersigned thereunto duly authorized.


                              PANDA INTERFUNDING CORPORATION


Date:  November 11, 1997      By:  /s/ Janice Carter
                                   Janice Carter
                                   Executive Vice President,
                                   Secretary and Treasurer





                          EXHIBIT INDEX


                                              Sequentially
Exhibit                                          Numbered
Number    Description                              Page

27.01     Financial Data Schedule