By Staff Reporter
KARACHI: Pakistan sold its first yuan-denominated Panda bond in China’s onshore capital market on Thursday, raising the equivalent of $250 million at a coupon of 2.5 percent in a sale that drew orders exceeding five times the amount offered.
The three-year fixed-rate issuance of 1.75 billion renminbi marked Islamabad’s debut in the world’s second-largest bond market and its first sovereign RMB-denominated borrowing there.
Advisor to Finance Minister Khurram Schehzad announced the result in a post on X, saying the transaction drew demand of more than 8.8 billion renminbi, or about $1.26 billion. Demand for the inaugural tranche alone surpassed the entire 7.2 billion renminbi ($1 billion equivalent) size of Pakistan’s planned Panda bond program, Schehzad wrote. The strong order book allowed pricing at a competitive 2.5 percent coupon, which he described as evidence of the market’s confidence in the country’s improving macroeconomic fundamentals, external stability, disciplined fiscal management and sovereign repayment capacity.
The sale comes as Pakistan seeks to broaden its funding sources beyond traditional bilateral and multilateral lenders and re-establish access to international capital markets after years of economic strain.
Finance Minister Muhammad Aurangzeb traveled to Beijing for the issuance ceremony, which was held at the Pakistani embassy and attended by Chinese government officials, financial institutions, international organizations and investors, according to a finance ministry statement. The program had been set at $1 billion equivalent, with the initial tranche sized at $250 million. The transaction was supported by the Asian Development Bank and the Asian Infrastructure Investment Bank.
Panda bonds are yuan-denominated securities issued by foreign governments, supranational organizations or corporations in mainland China. For Pakistan, the debut represents a strategic step into China’s deep domestic capital market, diversification of its investor base and a deepening of financial ties with Beijing.
In his X post, Schehzad called the outcome “a powerful reflection of growing international investor confidence in Pakistan’s economic outlook and reform trajectory.” He added that the issuance signals Islamabad’s transition “from stabilisation to strategy, from crisis management to market confidence, and from short-term financing pressures to long-term capital market access.” “The success of the Panda bond sends a powerful signal to global investors that Pakistan’s economic recovery is gaining international recognition,” Schehzad wrote. “It reflects confidence in the country’s reform agenda, improving fiscal and external indicators, successful debt management, and commitment to sustainable growth. This milestone marks the beginning of a new chapter in Pakistan’s economic and financial engagement with the world.”
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