Pakistan Set to Tap China for $300 Million Panda Bonds

Finance Minister Muhammad Aurangzeb has said that Pakistan is keen to tap Chinese investors by selling around $300 million in Panda bonds. Speaking to Bloomberg, the minister said that selling yuan-denominated debt will allow the country to diversify its funding sources and engage investors in a new market. The finance minister said that Pakistan should have looked at this option some time back. He highlighted that China is the second largest and deepest bond market in the world and tapping into it is the right thing to do for Pakistan as it has already sold dollar and Eurobonds. The minister said that the initial Panda bond sale would be around $250 to 300 million, followed by further issuances. Aurangzeb said that the government’s cash balances are strong enough to able to pay its debts on time. He said that debt payments are unlikely to put pressure on the rupee and it will remain stable. The minister said that he expects the issue to remain range-bound around the current levels but added that oil prices are a wildcard, which remains uncertain due to Red Sea attacks. Panda bonds are yuan-denominated instruments sold in China by offshore issuers, including companies, multilateral agencies, and governments. The Panda bonds market has attracted issuers such as Egypt and Hungary, thanks to its lower cost of borrowing. Growth in Panda bond issuance could easily double in 2024, from about 103.35 billion yuan last year, according to Bloomberg Intelligence.