Financial experts and policymakers have identified Panda Bonds—yuan-denominated financial instruments—as a potential tool for debt restructuring and green infrastructure development.
The discussion took center stage at a high-level webinar titled Panda Bonds: Mobilising Sustainable Investments for Pakistan’s Renewable Energy Future, organised by the Sustainable Development Policy Institute (SDPI).
Government officials and financial specialists highlighted the strategic role of Panda Bonds in securing sustainable investments for Pakistan’s renewable energy transition.
Eraj Hashmi, Director of Debt Management at the Finance Ministry, revealed that preparations were underway to issue sustainable Panda Bonds within the current calendar year.
He underscored their financial appeal, citing lower interest rates compared to Eurobonds and noted ongoing engagements with the Asian Infrastructure Investment Bank (AIIB) and credit rating agencies to facilitate market entry.
Additionally, he disclosed that the government was considering issuing a Green Sukuk, reflecting its commitment to green financing.
Former AIIB Managing Director Hamid Sharif stressed the need for structured credit enhancements to bolster market confidence, given Pakistan’s low credit rating. He urged the government to address investor concerns related to security risks and profit repatriation challenges.
Dr Hassan Daud Butt, a former CPEC project director, highlighted the importance of timing and narrative-building in issuing Panda Bonds. He suggested linking them to high-profile projects such as the Main Line-1 (ML-1) railway project and sustainable tourism initiatives in Gilgit-Baltistan, while leveraging existing ties with Chinese investors and institutions. According to Dr Butt, the second half of 2025 would be an ideal time for Pakistan’s entry into the Panda Bond market.
Dr Christoph Nedopil Wang, Director of Griffith Asia Institute, pointed out the strong demand for Panda Bonds among Chinese investors, citing past oversubscription rates. He advised Pakistan to adopt innovative financing models, drawing from Egypt’s sustainable bond strategies, and recommended proactive efforts to mitigate transaction costs and currency exchange risks associated with yuan-denominated instruments.
The webinar concluded with a consensus on Panda Bonds as a viable alternative for Pakistan to diversify funding sources, enhance economic sustainability, and strengthen bilateral financial cooperation with China.
