Pakistan raises $250m equivalent in inaugural Panda bond issuance

ISLAMABAD: Pakistan raised $250 million equivalent through its inaugural Panda bond issuance in the Chinese capital market at an interest rate of 2.5 per cent, with a three-year maturity, according to Advisor to the Finance Minister Khurram Schehzad.

In a social media post on X on Thursday, Schehzad said: “Pakistan has successfully completed its inaugural Panda bond issuance in China’s onshore capital market today, marking the country’s first-ever entry into the world’s second-largest and deepest capital market.”

The inaugural Panda bond is a three-year fixed-rate instrument, making it Pakistan’s first-ever renminbi (RMB)-denominated sovereign issuance in China’s onshore capital market, he announced.

“The landmark Panda bond issuance of RMB 1.75 billion (equivalent to $250 million) attracted overwhelming investor demand of over RMB 8.8bn (approximately $1.26bn), resulting in oversubscription of more than five times,” Schehzad wrote.

Importantly, he said that the demand for the inaugural tranche alone exceeded Pakistan’s entire planned Panda bond programme size of RMB 7.2 billion ($1bn equivalent) — a powerful reflection of growing international investor confidence in Pakistan’s economic outlook and reform trajectory.

“The strong order book enabled highly competitive pricing (2.5pc coupon), demonstrating the market’s positive assessment of Pakistan’s improving macroeconomic fundamentals, external stability, disciplined fiscal management and sovereign repayment capacity,” he said.

He said that the issuance represented Pakistan’s strategic entry into China’s capital market and diversification of the country’s investor base.

Moreover, he added that it also reflected the strengthening of Pakistan-China financial cooperation and Pakistan’s structured return to international capital markets from a position of improving stability and credibility.

“The success of the Panda bond sends a powerful signal to global investors that Pakistan’s economic recovery is gaining international recognition,” he said.

“It reflects confidence in the country’s reform agenda, improving fiscal and external indicators, successful debt management, and commitment to sustainable growth,” he stated.

He reasserted that Pakistan was steadily transitioning from stabilisation to strategy, from crisis management to market confidence, and from short-term financing pressures to long-term capital market access.

“This milestone marks the beginning of a new chapter in Pakistan’s economic and financial engagement with the world,” Schehzad said.

On Wednesday evening, Finance Minister Muhammad Aurangzeb left for China to participate in the issuance ceremony of Pakistan’s inaugural Panda bond in Beijing.

According to a finance ministry statement, the overall Panda bond programme had been set at $1bn, while the inaugural issuance will amount to the equivalent of $250m.

The issuance is supported by the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB), it added.