To bolster its foreign exchange reserves, Pakistan is seeking to issue up to $300 million in Panda Bonds, targeting Chinese investors for the first time, according to Finance Minister Muhammad Aurangzeb.
The initiative was reported by Bloomberg, highlighting Pakistan’s strategy to diversify its funding sources by tapping into the Chinese bond market, considered the second-largest globally.
Aurangzeb emphasized the significance of accessing China’s bond market, noting that Pakistan has previously issued dollar and Eurobonds.
The move to issue yuan-denominated debt aims to engage with a new investor base, enhancing the country’s financial resilience.
The initial issuance is projected to range between $250 million to $300 million, with plans for subsequent offerings in the future.
Panda bonds, which are yuan-denominated securities sold in China by foreign entities, offer Pakistan an opportunity to strengthen its financial position amid challenges such as high inflation, rising interest rates, and declining foreign exchange reserves.
These factors have collectively hampered the country’s economic growth prospects.
The decision follows directions from Prime Minister Shehbaz Sharif to the Ministry of Finance to explore the potential of Panda Bonds as a means to improve liquidity.
Despite current economic pressures, Aurangzeb remains optimistic about Pakistan’s capacity to fulfill its debt obligations without adversely affecting the national currency.
He anticipates the rupee will maintain stability, though he acknowledges the unpredictability of oil prices as a potential risk factor.
At what rate and what are comparable rates ?