Key Points
• Pakistan plans debut Panda bond worth $250 million
• ADB and AIIB to back first tranche of total $1 billion programme
• Government cites improving exports and remittances despite regional turmoil
ISLAMABAD: Pakistan is expected to access China’s capital markets for the first time through a yuan-denominated Panda bond next week, Finance Minister Muhammad Aurangzeb said on Saturday, as the government aims to diversify external finance.
“God willing, next week you will hear good news that for the first time, we will be accessing Chinese capital markets through Panda bond,” Aurangzeb told a press conference in Islamabad.
The proposed issue, valued at $250 million, will form the first tranche of a planned $1 billion programme and will be backed by the Asian Development Bank and the Asian Infrastructure Investment Bank.
The planned offering marks a significant step in Pakistan’s efforts to deepen financial integration with China and reduce reliance on traditional Western-dominated funding markets and short-term bilateral arrangements.
Panda bonds are yuan-denominated debt instruments issued by foreign governments or institutions in China’s domestic bond market.
For Pakistan, the move could help expand access for investors, strengthen foreign exchange buffers, and reinforce economic ties with Beijing at a time of heightened global financial uncertainty.
Aurangzeb said Pakistan’s economy was showing signs of stabilisation and recovery despite severe external pressures linked to the US-Iran conflict and disruptions around the Strait of Hormuz, one of the world’s most critical energy shipping lanes.
He said rising exports and workers’ remittances were helping support the economy even as higher energy import costs and supply disruptions continued to strain the country’s finances.
Pakistan relies heavily on imported fuel and liquefied natural gas, leaving it vulnerable to volatility in global energy markets and regional geopolitical tensions.
The finance minister’s remarks came days after the International Monetary Fund released about $1.32 billion in fresh funding to Pakistan under two ongoing financial support programmes.
Aurangzeb said Islamabad was also evaluating additional financing avenues, including Eurobonds, commercial borrowing and support from friendly countries. These efforts are part of the government’s endeavour to manage foreign exchange reserves and refinance external liabilities.
Economists say a successful entry into China’s domestic debt market could improve investor confidence in Pakistan’s reform programme. It would also provide the country with an alternative long-term financing source at a critical stage of its economic recovery.
