KARACHI: Pakistan is aiming to launch its first-ever Panda bond — a yuan-denominated bond issued in China’s domestic market — in January, as the government looks to diversify external funding sources and strengthen debt sustainability under ongoing economic reforms, the finance ministry said on Friday.
The planned issuance would mark Pakistan’s debut in China’s onshore bond market and comes as Islamabad seeks alternatives to dollar-denominated borrowing amid tight global financial conditions and continued reliance on multilateral support.
Panda bonds are renminbi-denominated instruments sold to Chinese investors by foreign governments or companies, offering issuers access to China’s deep domestic capital markets while reducing exposure to foreign-exchange volatility.
“The Panda Bond program is being pursued as a structured and programmatic financing strategy, aligned with prudent debt management objectives,” the finance ministry said in a statement after Finance Minister Muhammad Aurangzeb chaired a review meeting on the planned issuance.
The ministry said Pakistan envisages a Panda bond program of around $1 billion, with an inaugural tranche equivalent to $250 million, subject to final regulatory approvals from Chinese authorities expected by early January. It added that preparatory work for subsequent issuances under a second phase of the program has already begun.
According to the statement, approvals from multilateral partners have been secured and engagement with Chinese institutional investors has so far been “constructive,” reflecting confidence in Pakistan’s macroeconomic stabilization efforts and reform framework. Pricing will be finalized closer to market engagement once regulatory requirements are completed.
Pakistan is operating under a $7 billion, 37-month bailout program with the International Monetary Fund that requires fiscal consolidation, stronger tax collection and structural reforms across energy, state-owned enterprises and the investment climate. The country has faced elevated borrowing costs in international markets in recent years, prompting the government to explore alternative and market-based financing channels, including yuan-denominated instruments.
The finance ministry said the Panda bond would support Pakistan’s medium-term debt sustainability goals by broadening the investor base and reducing reliance on traditional external borrowing sources.
