Pakistan plans to issue Panda Bonds to Chinese investors for $300 million

Muhammad Aurangzeb, the federal minister of finance and revenue, stated on Friday that he was eager to reach out to Chinese investors by offering to sell up to $300 million worth of Panda bonds this year, marking the first time that he had done so.

The minister stated in a Friday interview with Bloomberg that Pakistan will be able to expand its finance sources and connect with investors in a new market by selling debt denominated in Yuan.

He stated, “quite frankly, we ought to have looked at this quite some time back.” He stated that since Pakistan has previously issued dollar and eurobonds, it is the “right thing to do for the country” to access China’s bond market, which is the “second-largest and deepest in the world.”

According to Aurangzeb, there will be further Panda bond issuances after the initial $250 million to $300 million sale. According to the finance minister, the government has sufficient cash in hand to pay down its obligations on schedule.

He stated that he expects the rupee to be steady and that the payments are unlikely to put pressure on the currency. “At this moment, I don’t really see a lot of pressure on the rupee,” he stated. “I believe it will stay range bound around these levels as we move forward.” He said, “The wildcard” is oil prices, which are still erratic in light of the Red Sea assaults.

Based on local prices provided by Bloomberg, the rupee in Pakistan has appreciated 1.3% this year, making it one of the best-performing currencies in Asia. Negotiating additional loans with the International Monetary Fund (IMF) to assist rebuild the country’s reserves soon after the present bailout program ends in April is Aurangzeb’s most pressing task, according to a Bloomberg article.

According to the journal, the IMF stated earlier this week that Pakistan has shown interest in a new medium-term program to enhance its economic recovery and address its external and fiscal problems.

Aurrangzeb reportedly stated that Pakistan will look to the IMF for a fresh loan arrangement that would last at least three years. After the Washington-based lender’s yearly spring meetings, he added, more information would be discussed.

Panda bonds are financial products denominated in yuan that are offered for sale in China by government agencies, corporations, and international organizations. Due to the market’s decreased borrowing costs, issuers like as Egypt and Hungary have been pulled in. According to Bloomberg Intelligence, the growth in Panda bond issuance could easily quadruple in 2024 from about 103.35 billion yuan ($14.3 billion) last year.