Pakistan to raise $250 million through first-ever Panda Bond next week

Pakistan is poised to tap China’s onshore debt market for the first time next week with a $250 million Panda bond, marking the opening tranche of a planned $1 billion programme aimed at diversifying the country’s external borrowing sources.

Finance Minister Muhammad Aurangzeb announced the planned issuance at a press conference on Saturday, saying the government expected to secure access to Chinese capital markets through the yuan-denominated instrument.

The bond will carry credit enhancement from the Asian Development Bank and the Asian Infrastructure Investment Bank, providing additional comfort to investors and helping Pakistan establish a foothold in a new source of funding.

The proposed launch comes as Islamabad seeks to broaden its financing base following the release of roughly $1.32 billion from the International Monetary Fund under two ongoing lending arrangements.

Aurangzeb said economic indicators were improving, citing stronger exports and rising workers’ remittances as signs that the recovery was gaining traction.

He noted that the economy had come under pressure from the conflict involving Iran and the disruption of shipping through the Strait of Hormuz, a critical route for global oil and gas flows. Pakistan remains highly exposed to such disruptions because of its dependence on imported fuel and liquefied natural gas.

The finance minister said the government had explored alternative financing options, including Eurobonds and commercial borrowing, to replace a $3.5 billion facility from the United Arab Emirates and preserve foreign exchange reserves.

He added that Saudi Arabia later provided an additional $3 billion in support, helping Pakistan close a multi-billion-dollar financing gap and stabilize its external position.