Pakistan plans second $500m Panda bond without ADB, AIIB guarantees
Pakistan is preparing a second $500 million Panda bond in China, The News reported, citing Finance Division sources. The government is looking at Chinese credit enhancement instead of guarantees from the ADB and AIIB.
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- Second Panda bond of $500 million is planned for January-June 2027, with launch expected in April or May.
- Finance Ministry is exploring Chinese credit enhancement companies instead of ADB and AIIB guarantees.
- Pakistan repaid $1.3bn in Chinese commercial loans, and the amount has not been fully refinanced.
Pakistan is preparing to issue a second Panda bond worth $500 million in China during the second half of the current fiscal year, from January to June 2027, The News reported on Tuesday. The plan comes as Islamabad has not yet secured full refinancing for $1.3 billion in Chinese commercial loans.
Top Finance Division sources told the paper that the Ministry of Finance has started preparations for the second phase without guarantees from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB). The government is exploring the possibility of involving Chinese credit enhancement companies in the deal.
Pakistan had repaid $1.3 billion in Chinese commercial loans, expecting the money to be refinanced within a few months. Some refinancing has since been arranged, but not the full amount, so Islamabad is seeking more funds through China's capital market.
The first Panda bond was issued in May 2026 with guarantees from the ADB and AIIB. It raised 1.75 billion yuan, about $258 million, and was Pakistan's debut in the renminbi-denominated bond market. The proceeds were earmarked for the Sustainable and Green Infrastructure Project, covering water governance, energy reliability and efficiency, and healthcare capacity.
According to the development banks, it was the first bond with less than full guarantee coverage to receive a domestic AAA rating in China. They said it showed how partial credit guarantees can help emerging economies tap domestic capital markets and mobilise private-sector funding.
An official told The News that Pakistan gained valuable experience from the debut, which required extensive preparation to meet the requirements of China's domestic market. The official said some form of Chinese credit enhancement is likely to be used for the second phase in the coming months.
The second issuance is expected in April or May 2027, subject to completion of preparations and financing arrangements. If it goes ahead as planned, total Panda bond proceeds would be about $758 million, above $750 million, in the current fiscal year.
Why it matters
The borrowing adds to public debt that affects the economy Pakistanis live in. It is also part of Pakistan's effort to replace $1.3 billion in Chinese commercial loans it has already repaid.
