https://arab.news/84pw5
- The issuance of Panda bonds will have credit enhancement from Asian Infrastructure Investment Bank and Asian Development Bank
- Finance Minister says the move was ‘long overdue’ to strengthen ties with Asian markets and reduce reliance on Western channels
ISLAMABAD: Pakistan plans to raise $250 million through its first-ever yuan-denominated Panda bonds by the end of 2025, Pakistani state media reported on Sunday, amid Islamabad’s efforts to diversify funding sources and strengthen macroeconomic resilience.
Islamabad is being advised on the issuance of Panda bonds by the China International Capital Corporation, a partially state-owned financial services company. However, the latest figure shared in Jan. is lower than the $300 million targeted by Pakistan last year.
Pakistan’s Finance Minister Muhammad Aurangzeb has confirmed that the issuance of Panda bonds will feature credit enhancement from the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB), the state-run Pakistan TV reported.
“From our perspective, this is a very important trade, a funding diversification discussion,” Aurangzeb was quoted as saying by the broadcaster.
“We have previously done Euro issuances and US dollar Islamic support, so we have been late, quite frankly, in terms of tapping the second-largest and second-deepest capital market in the world.”
The South Asian nation faced a prolonged economic crisis in recent years that pushed it to the verge of a sovereign debt default in mid-2023. Pakistan has since implemented stringent economic reforms.
He said the move was “long overdue” to strengthen ties with Asian markets and reduce reliance on Western financial channels.
“We are following the Egyptian model because they had credit enhancement, so we will have the same from AIIB and ADB,” he explained.
The bond issuance is part of a broader strategy to consolidate macroeconomic stability which has shown notable improvements, according to the finance minister.
“If we look at it in a holistic way, around macroeconomic stability, a stable currency, FX reserves, inflation coming into single digits, and the policy rate coming down,” he said.
“We are making progress that now has two external validations.”