Pakistan Eyes $750 Million in First Panda Bond Financing

Pakistan is preparing to secure about $750 million in the coming weeks through a mix of commercial borrowing and the issuance of its first-ever Panda Bond. The move is aimed at boosting foreign exchange reserves before a Eurobond repayment and a critical International Monetary Fund (IMF) review.

Islamabad is in talks with a consortium of international banks, including Deutsche Bank and Standard Chartered, to arrange $300 million to $500 million in commercial financing. The funds will help cover a $500 million repayment on a Eurobond maturing September 30, 2025.

Alongside this, the government plans to issue its inaugural Panda Bond worth $250 million in Chinese renminbi, likely in November. The bond will be privately placed on China’s Interbank Bond Market and backed by guarantees from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB). Structured with a three-year maturity and a fixed-rate coupon, the instrument is expected to carry a single-digit interest rate.

The guarantees from ADB and AIIB will cover up to 95 percent of the principal and interest, enabling Pakistan to secure a domestic AAA rating in China despite its sub-investment-grade international status. The guarantee cap is set at $285 million, split between $160 million from ADB and $125 million from AIIB. Habib Bank Limited and China International Capital Corporation are serving as advisors for the bond issuance.

The fundraising efforts coincide with the arrival of an IMF mission in Karachi on September 25. The delegation is scheduled to meet with the State Bank of Pakistan (SBP), the Overseas Investors Chamber of Commerce & Industry (OICCI), and the Pakistan Business Council (PBC) to assess the government’s financing strategy and reform commitments under the ongoing program.