In one of the major milestones of the Pakistan-China economic relations, Pakistan has decided to issue Panda Bonds of a worth of 1 billion dollars in the Chinese market as per sources close to the Finance Ministry. In this article, we will know about Panda Bonds, its issuance plan and method to buy.
What Are Panda Bonds?
Panda Bonds are bonds issued in China by foreign entities and denominated in Chinese yuan (CNY). They allow countries and corporations to borrow from Chinese investors under Chinese regulations. For Pakistan, Panda Bonds offer a stable financing option and a way to tap into international markets beyond domestic borrowing.
Panda Bonds Issuance Plan and Phases
The $1 billion Panda Bonds issuance will take place in three phases between the current fiscal year and 2028:
| Phase | Amount (USD) | Timeline |
| Phase 1 | $250 million | Current fiscal year |
| Phase 2 | $375 million | Next phase |
| Phase 3 | $375 million | By 2028 |
Previously it was planned to issue only 250 million dollars, but now 1 billion is planned.
The initiative is likely to get traction in the coming visit of Prime Minister Shehbaz Sharif to China, along with the Finance Minister.
Panda Bonds Market Size
- Pakistan’s entry into the Panda Bond market reflects its efforts to diversify borrowing instruments, reducing reliance on Treasury Bills with floating interest rates and shorter terms.
- GDP projections indicate substantial growth over the next three years:
- 2025 GDP: Rs114 trillion
- 2028 GDP: Rs163 trillion
- Expected increase: Rs48 trillion
- 2025 GDP: Rs114 trillion
This economic growth will provide stronger backing for Pakistan’s international bond issuances, including Panda Bonds.
Panda Bonds Current Price and Investment Details
- Panda Bond pricing depends on coupon rate and market demand.
- For Pakistan, yields are expected around 4–5% per annum in Chinese yuan.
- Investors need to consider currency exchange risk (PKR vs CNY) when calculating returns.
How to Buy Panda Bonds in Pakistan
Investors interested in Panda Bonds can follow these steps:
Open an account with an authorized bank that handles foreign bonds.
Submit the application form of investment in addition to KYC forms.
Follow bond prices and yields over banks or brokers.
The maturity and redemption of Track bonds which last 3-5 years usually according to the details of the bonds.
Currency and regulatory risks should be discussed with a financial advisor.
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Risks and Benefits of Panda Bonds
Benefits:
It is priced in the Chinese yuan allowing it to diversify the currency operations.
Great trust and regulatory scrutiny by Chinese administrators.
Access to international financial markets.
Risks:
Fluctuations in the exchange rate of PKR and CNY.
Issues of potential liquidity issues
The issuance of the I billion Panda Bonds of Pakistan is a significant milestone on the way to international financing and economic diversification. As the bonds will be issued in three installments, investors can continue investing and still monitor the market prices and economic growth.
Market size, pricing and buying process can help Pakistani investors make informed decisions and decide on this new investment avenue.
