Pakistan is preparing a Pakistan Panda bond issuance of about $500 million in China’s domestic market without guarantees from the Asian Development Bank (ADB), a Manila-based multilateral lender, and the Asian Infrastructure Investment Bank (AIIB), Finance Division sources said. The Ministry of Finance has begun work on this second phase for the second half of the current fiscal year, from January to June 2027. Officials are also exploring Chinese credit enhancement companies to support the transaction.
The push comes as Islamabad faces difficulty securing full refinancing of $1.3 billion in Chinese commercial loans it had already repaid. Some refinancing has since been secured, but the entire amount has not been restored, prompting a stronger effort to raise fresh funds through the Chinese capital market.
Why the second deal may skip ADB and AIIB guarantees
Pakistan launched its first Panda bond — a renminbi-denominated issue sold in China’s onshore market — in May 2026 with ADB and AIIB guarantee support. That debut raised 1.75 billion Chinese yuan, about $258 million, for the Sustainable and Green Infrastructure Project. According to the development banks, it was the first bond with less than full guarantee coverage to achieve a domestic AAA rating, a model meant to draw private capital into emerging-market deals.
“We are exploring options for launching the second phase of the Panda bond without guarantees from international lenders such as the ADB and AIIB,” the sources said. An official added that Pakistan now has experience from the debut and that “some form of Chinese credit enhancement is likely to be used” to raise $500 million in the coming months. The first transaction had required extensive preparatory work to meet China’s domestic market rules.
Timing, size and what the first bond funded
The second Pakistan Panda bond issuance is expected in April or May 2027, with a $500 million target. If both issues are completed as planned, combined proceeds would reach about $758 million — more than $750 million — during the current fiscal year.
Proceeds from the inaugural issue were earmarked for national priorities including water governance, energy reliability and efficiency, and healthcare capacity. That deal also formed part of efforts to mobilise financing for sustainable and green infrastructure and to diversify access to capital markets. Sources have not spelled out how the second tranche’s proceeds would be allocated beyond the broader aim of raising funds amid the incomplete Chinese-loan refinance.
Timeline: what has happened so far
- May 2026: Pakistan issues its first Panda bond of 1.75 billion yuan (about $258 million) with ADB and AIIB support for the Sustainable and Green Infrastructure Project.
- After that repayment cycle: Pakistan repays $1.3 billion in Chinese commercial loans expecting timely refinance; only partial refinance follows.
- Current preparations: The Finance Ministry starts work on a second $500 million issue without ADB and AIIB guarantees and studies Chinese credit enhancement.
- April or May 2027 (planned): Second issuance targeted; both deals would lift combined Panda proceeds to about $758 million if completed.
Aasan alfaaz mein
Pakistan China ke market mein doosra Panda bond nikalne ki tayyari kar raha hai, jis se lagbhag 500 million dollar milne ki umeed hai. Pehli dafa ADB aur AIIB ki guarantee thi; ab yeh un guarantees ke baghair, aur Chinese credit enhancement ke sath, socha ja raha hai. Wajah yeh hai ke $1.3 billion Chinese commercial qarze ki poori refinance abhi mukammal nahi hui. Agar April ya May 2027 mein yeh bond nikal gaya, to dono issues se mili raqam $750 million se zyada ho sakti hai.
