Pakistan is preparing to issue yuan-denominated bonds in the onshore market of China for the first time, with the total offering valued at up to 1.75 billion yuan.
The bonds, worth approximately 257 million US dollars, are three-year sustainable development instruments that could be priced as early as next week, according to informed sources.
The Asian Infrastructure Investment Bank and the Asian Development Bank will together provide a guarantee covering 95 percent of the total bond value.
Details of the issuance are still being finalised and remain subject to change, according to people with knowledge of the matter who requested anonymity to discuss private affairs.
Market Context
Panda bond issuance reached a record 84.2 billion yuan in the first quarter of this year, which was double the volume recorded during the same period a year ago.
Bloomberg data attributed the surge to lower funding costs and the ongoing internationalisation of the Chinese yuan, which has attracted increased interest from offshore borrowers seeking cheaper financing.
Yields on Chinese government bonds have remained broadly stable, with the 10-year yield holding at 1.757 percent on Friday, reflecting continued investor confidence in Chinese fixed-income assets.
Regional Interest
Indonesia finance minister has also signalled plans to issue panda bonds, indicating that interest in China’s onshore bond market is growing among governments across the Asian region.
Offshore borrowers have increasingly turned to China’s onshore market amid global financial uncertainty, with Chinese assets seen as a relatively stable option during ongoing tensions in the Middle East.
