Pakistan’s finance chief announces plans to float Panda bonds in Chinese market this year

Pakistan Finance Minister Muhammad Aurangzeb gestures as he speaks during an interview with Reuters at his office in Islamabad, Pakistan, on July 19, 2024. (REUTERS/File))

• Panda bonds are issued by foreign governments through Chinese financial markets
• Pakistan aims to raise about $200 million from Chinese investors by issuing these bonds

ISLAMABAD: Federal Minister for Finance and Revenue Muhammad Aurangzeb said on Wednesday Pakistan plans to issue Panda bonds this year to leverage the Chinese capital market and strengthen its economy.
Panda bonds are issued by foreign governments, companies or institutions through China’s interbank bond market or stock exchanges, with approval from Chinese regulators. Investors typically include Chinese banks, insurance companies, asset managers and institutional investors looking for yuan-denominated, low-risk assets.
Pakistan’s plan to launch these bonds can help diversify its funding sources, reduce reliance on Western markets and boost foreign exchange reserves, especially by attracting investment from Chinese institutions.
The Pakistani finance chief, who is currently in China to attend the four-day Boao Forum for Asia Annual Conference 2025, shared the administration’s plan to issue Panda bonds in an interview with CGTN English, a local news channel.
“I have been advocating and I am very keen that Pakistan, taking advantage of the second largest and the deepest capital market in the world, that we go for an inaugural Panda bond and we issue that,” Aurangzeb said.
“Because Pakistan has done previously many issues in US dollar and the Euro but we haven’t done that in the context of the Chinese capital market,” he added. “So, we are very hopeful that during this calendar year, we will do that.”
Aurangzeb announced in January the government wanted to raise about $200 million from Chinese investors through the issuance of the Panda bonds.
The development followed an upgrade in Pakistan’s sovereign rating by three major credit agencies, with the government aiming to get into the “single-B” category to return to global bond markets to raise funds.
The developments came after the country’s macroeconomic indicators considerably improved following a prolonged economic crisis that brought Pakistan to the verge of a sovereign debt default about two years ago, building massive inflationary pressure in the economy and forcing the government to raise interest rates above 20 percent.