KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb has expressed hopes that the successful launch of Pakistan’s inaugural Panda bond will pave the way for future sovereign issuances in China’s domestic debt market, his ministry said on Saturday, as the government seeks to diversify funding sources and deepen financial ties with Beijing.
Panda bonds are yuan-denominated bonds issued by foreign governments or institutions. The launch of 1.75 billion yuan (approximately $258 million) sustainable development bond on Thursday marked Pakistan’s first entry into China’s domestic bond market, which is one of the world’s largest capital markets.
Pakistan’s launch of its first-ever Panda bond came after the establishment of a 7.2 billion yuan ($1 billion) program, following two years of preparation and coordination with Chinese regulators, financial institutions and development partners.
Aurangzeb said Pakistan’s issuance marked a “transformational step” and opened a new chapter in Pakistan-China economic cooperation by enabling Pakistan to access the world’s second-largest and second-deepest capital market for the first time.
“Aurangzeb expressed appreciation for the support and cooperation extended by the Government of China, Chinese regulators, financial institutions, and multilateral development partners in facilitating Pakistan’s successful entry into the Chinese onshore bond market,” the Pakistani finance ministry said.
“He expressed confidence that the successful issuance would pave the way for future sovereign issuances and deeper financial connectivity between Pakistan and China.”
Pakistan has described the Panda Bond issuance as part of its efforts to diversify financing channels, strengthen investor confidence and expand its presence in international financial markets as it seeks to stabilize an economy long reliant on external financing support.
The finance minister emphasized that the issuance was not only significant for Pakistan’s financing strategy but it would also contribute toward internationalization of the Renminbi (RMB).
He noted that nearly one-quarter of bilateral trade between Pakistan and China is already being settled in RMB and Chinese Yuan (CNY), highlighting the increasing financial integration and expanding economic partnership between the two countries.
