Pakistan is set to issue its inaugural tranche of Panda bonds before the end of the year, aiming to raise $250 million through yuan-denominated debt, Bloomberg reported. The bond issuance will be conducted via private placement on China’s national interbank bond market to qualified institutional investors.
The bonds are expected to carry a coupon rate in the range of 3-4% per annum, with a three-year tenor. A consortium of financial advisers and underwriters, including China International Capital Corporation Ltd and Habib Bank Ltd, is involved in structuring the transaction.
This move comes as countries across emerging markets are increasingly turning to China for financing amid uncertainties over US trade policies and investor concerns about dollar holdings. Pakistan, a key partner in China’s Belt and Road Initiative, has already received billions in loans from Beijing to support its economy.
The issuance of Panda bonds is part of Pakistan’s strategy to tap Chinese investors as the country rebuilds its economy, which faced a near-default in 2023. Pakistan’s finance minister had previously mentioned that the first Panda bond sale would be followed by additional issuances.
Although Pakistan has struggled to raise external finances in recent years, the country recently received an upgrade from S&P Global Ratings. However, it remains sub-investment grade and requires an enhancement guarantee. To secure this, Pakistan has approached the Asian Infrastructure Investment Bank and the Asian Development Bank, according to the documents. Both banks did not respond to requests for comment outside of business hours.
