Pakistan on Thursday launched its first-ever Panda Bond in China’s onshore capital market. The move marked a major milestone in Islamabad’s efforts to diversify foreign financing and deepen economic ties with China.
Adviser to the Finance Minister Khurram Schehzad announced the development in a statement on X.
“The inaugural Panda Bond is a 3-year fixed-rate instrument, making it Pakistan’s first-ever RMB-denominated sovereign issuance in China’s onshore capital market,” Schehzad wrote.
The issuance raised RMB1.75 billion, equal to nearly $250 million. Meanwhile, investor demand crossed RMB8.8 billion, or around $1.26 billion. As a result, the bond received subscriptions worth more than five times the offered amount.
Schehzad said demand for the first tranche alone exceeded Pakistan’s total planned Panda Bond programme size of RMB7.2 billion.
“Importantly, demand for the inaugural tranche alone exceeded Pakistan’s entire planned Panda Bond programme size of RMB 7.2bn (US$1 billion equivalent) — a powerful reflection of growing international investor confidence in Pakistan’s economic outlook and reform trajectory,” he said.
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Furthermore, Pakistan secured a highly competitive 2.5% coupon rate.
“The strong order book enabled highly competitive pricing (2.5% coupon), demonstrating the market’s positive assessment of Pakistan’s improving macroeconomic fundamentals, external stability, disciplined fiscal management, and sovereign repayment capacity,” Schehzad added.
Pakistan strengthens global market access
The launch came a day after Finance Minister Muhammad Aurangzeb travelled to China to attend the issuance ceremony.
The government has recently intensified efforts to restore investor confidence after years of economic pressure. Last month, Pakistan returned to international debt markets through a Eurobond issue aimed at raising $750 million.
Additionally, the country secured $3 billion in deposits from Saudi Arabia. Pakistan also repaid $3.4 billion to the United Arab Emirates.
Earlier this week, the State Bank of Pakistan confirmed receiving $1.3 billion from the International Monetary Fund under the Extended Fund Facility and Resilience and Sustainability Facility programmes.
Consequently, analysts say investor sentiment towards Pakistan has improved in recent months.
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Panda Bonds allow foreign governments and companies to raise funds in China’s domestic bond market using the Chinese yuan. Moreover, several countries and multinational institutions now use the market to diversify financing sources and strengthen ties with Beijing.
Officials call issuance a turning point
Schehzad described the launch as more than a financing transaction.
“It marked Pakistan’s entry into China’s capital market and strengthened Pakistan-China financial cooperation,” he said.
He added that the successful issuance sent “a powerful signal to global investors that Pakistan’s economic recovery is gaining international recognition.”
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According to Schehzad, investors responded positively to Pakistan’s reform agenda, debt management efforts and improving fiscal indicators.
“This milestone marks the beginning of a new chapter in Pakistan’s economic and financial engagement with the world,” he concluded.
Economists believe the successful issuance could help Pakistan lower future borrowing costs if reforms continue and foreign reserves remain stable.
