Pakistan to issue yuan-denominated panda bonds in June: Finance Minister

Finance Minister Muhammad Aurangzeb says Pakistan will issue yuan-denominated panda bonds as early as June to further integrate its capital markets with China.

In an exclusive interview with South China Morning Post, he said Pakistan aims to raise 200- 250 million dollars from Chinese investors, emphasizing that it was absolutely critical for the nation to diversify its funding base.

Muhammad Aurangzeb also pledged more cooperation with Beijing on the next phase of the China–Pakistan Economic Corridor (CPEC).

He also called for more participation from China’s private sector and export-led industries to transform Pakistan’s economy.

Aurangzeb said Pakistan aimed to raise US$200 million to US$250 million from Chinese investors, adding that it was “absolutely critical” for the nation to diversify its funding base.

The minister is in Hong Kong for the two-day Asian Financial Forum, which began on Monday. “Since I took over [in March 2024], I have been very vocal about this – that we want to go for panda bonds, an inaugural sovereign panda bond … I’m pushing everyone, including our own teams, to see if we can get this done before June,” Aurangzeb said.

Panda bonds – typically denominated in yuan and issued in China by non-Chinese organisations, have gained traction as traders and countries seek to diversify from an over-reliance on the US dollar, while tapping into the world’s second-largest economy at attractive rates.

The minister added that Pakistan had followed Egypt’s lead to issue the yuan bonds on the back of credit improvement from the Beijing-led Asian Infrastructure Investment Bank (AIIB).

Last year, Egypt received guarantees from the AIIB and the African Development Bank, covering principal and interest, to issue panda bonds on the local mainland China market.

“I’ve met the president of the AIIB in Washington … with a very clear view that we will replicate what Egypt did in terms of the credit enhancement … which allows us to access the local capital markets for the panda bond,” he said.

Aurangzeb added that Pakistan would help to support the “internationalisation of the renminbi” and boost cooperation with the “second-largest and second-deepest capital market in the world”.

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