Pakistan Eyes Panda Bonds to Strengthen Economic Ties with China

Pakistan's Finance Minister Muhammad Aurangzeb is considering issuing Panda bonds denominated in yuan to tap into China's capital market, aiming to diversify funding sources and bolster foreign exchange reserves. This step marks Pakistan's inaugural entry into China's interbank bond market, amidst improved sovereign ratings.

Pakistan's Finance Minister Muhammad Aurangzeb has suggested that the country may issue Panda bonds in yuan within the year, aiming to access China's extensive capital market. This strategic move, discussed during an interview with China's CGTN at the Boao Forum for Asia, was reported by The Express Tribune.

Aurangzeb emphasized Pakistan's readiness to engage with the Chinese interbank bond market, marking a departure from previously issuing debt solely in Western markets. He expressed optimism about launching an inaugural Panda bond this calendar year. These yuan-denominated debt instruments are issued by foreign entities in China and attract investments from prominent Chinese financial institutions.

This initiative is part of a broader strategy to diversify funding sources and lessen dependency on Western markets, following Pakistan's economic recovery efforts. With improved sovereign ratings by major credit agencies, the finance minister is optimistic about strengthening Pakistan's economic ties with Beijing, while targeting an initial issue of approximately USD 200 million.

(With inputs from agencies.)