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$300m Panda bonds planned

Federal Finance Minister Muhammad Aurangzeb announced on Friday that Pakistan will introduce Panda bonds worth $300 million into the Chinese market this year.

According to details, the finance minister stated that Pakistan will enter the Chinese markets for bond sales for the first time. Initially, bonds worth between $250 to $300 million will be offered, with plans for further issuances in the future.

“We should have considered this some time ago,” he admitted. “China boasts the second-largest and most extensive bond market globally, making it a strategic move for our country to explore this market. Considering that Pakistan has already issued dollar and eurobonds, tapping into the Chinese market is the logical next step.”

Read Pakistan eyes $300m by selling Panda Bonds to Chinese investors

In his remarks on the country’s economy, he highlighted the government’s robust cash balances and assured that all loans are anticipated to be repaid on schedule. He expressed confidence that loan repayments will not exert pressure on the currency. Aurangzeb further mentioned that the rupee is expected to remain stable in the near future, adding that Pakistan intends to secure a new loan from the International Monetary Fund (IMF) for a minimum of three years, with a projected high economic growth rate for the next financial year. Further discussions will occur following the Washington-based lender’s annual spring meetings.

“Selling yuan-denominated debt will enable Pakistan to diversify its funding sources and access investors in a new market,” Aurangzeb stated in an interview with Bloomberg in Islamabad.

Panda bonds, denominated in yuan, are sold in China by offshore issuers, including governments, multilateral agencies, and companies. The market’s appeal lies in its lower borrowing costs, attracting issuers such as Egypt and Hungary. According to Bloomberg Intelligence, Panda bond issuance could potentially double in 2024, surpassing 103.35 billion yuan ($14.3 billion) from the previous year. WITH ADDITIONAL INPUT FROM APP

Published in The Express Tribune, March 23rd, 2024.

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