KARACHI: Pakistan has raised $250 million through its first sovereign Panda Bond issuance in China’s domestic market, marking the country’s entry into the world’s second-largest bond market as it seeks to diversify external financing sources.
The yuan-denominated bond sale, announced on Thursday, is part of a broader $1 billion Panda Bond programme aimed at expanding Pakistan’s access to international capital markets and strengthening financial cooperation with China.
A Panda Bond is a yuan-denominated debt instrument issued by a foreign government or entity in China’s onshore financial market.
The three-year bond was issued at a 2.5% coupon rate and attracted investor orders worth more than 8.8 billion yuan, or around $1.3 billion, according to Khurram Schehzad, adviser to Pakistan’s finance minister.
Strong demand in debut issuance
The $250 million issuance represents the first tranche of Pakistan’s planned $1 billion Panda Bond programme.
Pakistan to Launch $250 Million Panda Bond in January
Investor demand exceeded the amount offered by more than five times, reflecting strong interest in Pakistan’s first entry into China’s domestic capital market.
The issuance was backed by the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB).
Pakistan expands financing options
The bond sale comes as Pakistan continues efforts to stabilise its economy after securing a $7 billion International Monetary Fund (IMF) Extended Fund Facility in 2024 following a near-default crisis the previous year.
The issuance gives Pakistan access to an additional source of financing as the country works to manage external funding requirements and strengthen foreign exchange reserves.
Pakistan’s foreign exchange reserves stood at $21.3 billion as of May 8, according to official figures. The total does not include an additional $1.3 billion IMF disbursement received on May 12.
Moody’s currently rates Pakistan at Caa1 with a stable outlook, while Fitch has assigned the country a B+ rating. Both remain below investment grade.
China is Pakistan’s largest bilateral lender and a major economic partner under the China-Pakistan Economic Corridor (CPEC) infrastructure programme.
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