By Staff Reporter
KARACHI: The Asian Development Bank and the Asian Infrastructure Investment Bank joined forces to back Pakistan’s inaugural sale of a yuan-denominated Panda bond, providing fresh financing for the country’s Sustainable and Green Infrastructure Project, the ADB said on Friday.
The 1.75 billion-yuan ($258 million) sustainable development bond was priced and launched on Thursday, marking Pakistan’s entry into China’s onshore capital market — one of the largest in the world. Panda bonds are renminbi-denominated securities issued by foreign governments, institutions or companies in mainland China.
The transaction represents a milestone in the use of credit guarantees to open Chinese markets to developing economies. It is the first Panda bond to win a domestic AAA rating with less than 100% guarantee coverage, establishing a template for partial guarantees to crowd in private capital for emerging-market borrowers. “This transaction not only enabled Pakistan to access the PRC’s onshore bond market, but also allowed it to secure competitive pricing, supporting the country’s sustainable infrastructure and human capital development,” Leah Gutierrez, ADB director-general for Central and West Asia, said in a statement.“ The panda bond issuance expands Pakistan’s access to international capital markets.”
Demand for the opening tranche exceeded the size of Pakistan’s entire planned Panda bond program of 7.2 billion yuan ($1 billion), according to Khurram Schehzad, the country’s finance adviser. The oversubscription reflected rising investor confidence in Pakistan’s economic outlook and its ongoing reform efforts. The bond was formally launched at a ceremony held at the Pakistani embassy in Beijing. Attendees included representatives from the Chinese government and financial institutions, multilateral organizations, investors and banking-sector participants.
Proceeds will finance multiple sub-projects under the Sustainable and Green Infrastructure framework, targeting national priorities in water governance, energy reliability and efficiency, and expansion of health-care capacity. “By embedding sustainability objectives into public sector financing, this transaction underscores the Government of Pakistan’s strong commitment to fostering green and sustainable infrastructure development and reinforces the country’s active engagement with international capital markets,” the ADB said.
Meanwhile, Finance Minister Muhammad Aurangzeb called the transaction a “real landmark” for the country and the start of deeper financial ties with Beijing. The sale, completed on Thursday, marks the first time a South Asian sovereign has tapped the world’s second-largest bond market and opens a new long-term funding channel for Islamabad as it seeks to diversify away from traditional external borrowing.
Speaking on Friday at a ceremony at Pakistan’s embassy in Beijing, Aurangzeb said the debut issuance “marks a beginning of a new chapter in Pakistan’s economic and financial engagement with China, in the context of international capital markets.” He added that the transaction reflected “the growing maturity of our economic cooperation and the confidence of Chinese institutions and investors in Pakistan.”
The deal was the first tranche of a CNY 7.2 billion ($1 billion) Panda bond program that Pakistan established after two years of preparation involving Chinese regulators, development banks and financial advisers. The proceeds from the sustainable bond will finance projects in water, energy and health, underscoring the government’s focus on inclusive growth.
Aurangzeb described the offering as Pakistan’s first Sustainable Panda Bond and said it demonstrated “the Government’s commitment to inclusive and sustainable growth.” He noted that the issuance received an “overwhelmingly positive response” and was oversubscribed, signaling investor confidence in the country’s economic outlook and reform program.
China International Capital Corp. acted as lead underwriter, with Bank of China, Standard Chartered Bank and Hongta Securities as joint lead underwriters. Habib Bank Ltd. served as financial adviser. Credit enhancement guarantees from the Asian Infrastructure Investment Bank and the Asian Development Bank helped secure the transaction and broaden its appeal.
Aurangzeb thanked the Chinese authorities — including the Ministry of Finance, the People’s Bank of China and the National Association of Financial Market Institutional Investors — as well as the rating agency CCXI, law firm Fangda Partners and the Pakistani embassy team in Beijing for their support. He singled out the multilateral lenders for their role in making the debut possible. “Our goal was to establish Pakistan’s long-term presence in the Chinese capital market and to create a sustainable platform for future sovereign issues,” Aurangzeb said. He described the sale as “not the end, but the beginning of a long-term partnership between Pakistan and the Chinese capital market.”
The transaction comes as Pakistan’s economy shows signs of stabilization after years of external financing dependence. Aurangzeb pointed to stronger GDP growth, sharply lower inflation, rising foreign-exchange reserves, fiscal consolidation and a more stable external sector supported by resilient exports and steady remittance inflows.
The government is pushing ahead with tax reforms centered on digitalization and broadening the tax base, energy-sector changes aimed at resolving circular debt and improving efficiency, and state-owned enterprise restructuring that includes privatization. Investment climate improvements through regulatory simplification and targeted sectoral reforms are also under way. Aurangzeb reaffirmed Islamabad’s commitment to its International Monetary Fund program, saying adherence to the reform agenda had “strengthened macroeconomic foundations and reinforced market confidence in the country’s economy.”
Panda bonds are yuan-denominated securities issued by foreign governments or institutions in China’s domestic market. For Pakistan, the issuance represents both a diversification of funding sources and a symbolic deepening of financial cooperation with its largest bilateral creditor. Aurangzeb said Pakistan was “proud to become the first Panda Bond issuer from South Asia,” and expressed hope that the CNY 7.2 billion program would provide a reliable platform for future taps and further financial connectivity between the two countries.
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