China regulatory approvals awaited: USD250m Panda Bond inaugural issuance targeted for next month

ISLAMABAD: Pakistan is advancing towards a USD1 billion Panda Bond program, with an inaugural issuance of USD 250 million targeted for January, pending final regulatory approvals from the relevant Chinese authorities, which are expected by early next month.

Federal Minister for Finance and Revenue, Muhammad Aurangzeb, chaired a meeting at the Finance Division on Friday to review progress on Pakistan’s inaugural issuance of Panda Bond.

The Finance Minister was briefed by the Ministry of Finance’s Debt Management Office team, along with senior officers of the Finance Division, on the status of approvals, investor engagement, and regulatory processes.

The meeting noted that approvals from multilateral partners have been secured and that engagement with Chinese institutional investors has been constructive. Investor sentiment has been powerful and highly constructive, with broad-based interest and encouraging feedback from a diversified investor base in this competitive inaugural issuance. This reflects strengthening confidence in Pakistan’s macroeconomic stabilization, an improved policy and reform framework, and a positive medium-term outlook. Final regulatory approvals from the relevant Chinese authorities are expected by early January, subject to which the inaugural issuance is planned to be launched and concluded in January.

The Finance Minister emphasized that Pakistan’s entry into the Chinese onshore bond market is being pursued as a structured and programmatic financing strategy, aligned with prudent debt management objectives. The Panda Bond program is envisaged at approximately USD 1 billion, with the inaugural tranche planned at an equivalent of USD 250 million. Preparatory work for subsequent issuances under “Panda Series II” has already commenced, with Chinese regulatory authorities fully apprised of this phased approach.

Participants highlighted that prevailing market conditions remain supportive, with broad-based investor interest and orderly market functioning. Documentation and guarantees are in place, and engagement with financial institutions is progressing as planned.

The meeting was also informed that initial outreach has been undertaken with financial institutions for Panda Series II, with proposals expected around the closing of the inaugural issuance. Pricing will be determined closer to market engagement following completion of all regulatory requirements.

The Finance Minister expressed satisfaction with the progress achieved and reaffirmed the government’s commitment to prudent, market-based financing, noting that the inaugural Panda Bond will further support Pakistan’s medium-term debt sustainability and diversification of funding sources.

Reuters adds: Government is targeting January to issue its first panda bond tranche, part of a planned programme of up to USD1 billion, the finance ministry said on Friday, as Islamabad seeks to diversify funding sources and tap China’s onshore debt market.

The inaugural issuance is expected to raise the equivalent of about USD250 million, with further tranches to follow under a phased programme once regulatory approvals are completed, the ministry said after Finance Minister Muhammad Aurangzeb chaired a review meeting on the plan.

Approvals from multilateral partners have already been secured, and final clearances from Chinese regulators are expected by early January, the statement said.

The panda bond programme, denominated in yuan and sold on China’s domestic market, is part of Pakistan’s broader debt management strategy as it works to stabilise its economy under a USD7 billion International Monetary Fund programme.

Pricing for the inaugural bond will be determined closer to the launch once all regulatory requirements are completed, the ministry said.

The finance ministry said engagement with Chinese institutional investors had been constructive, reflecting improving confidence in Pakistan’s macroeconomic outlook following recent policy reforms.

Preparatory work has already begun for subsequent tranches within the planned USD1 billion panda bond programme.

Moody’s raised its long-term foreign-currency issuer rating to Caa1 with a stable outlook in August 2025, citing an improving external position supported by reforms and IMF support. S&P Global Ratings upgraded Pakistan to B- with a stable outlook in July 2025.

Pakistan has relied heavily on bilateral and multilateral financing, including short-term funding from Middle Eastern banks, but is now looking to broaden its investor base through markets such as China’s onshore bond market.

Copyright Business Recorder, 2025