Pakistan eyes second $500 million Panda bond in China in 2027

Pakistan is preparing to issue a second $500 million Panda bond in China between January and June 2027 as the government seeks to address a shortfall in refinancing Chinese commercial loans worth $1.3 billion.

Pakistan is preparing to issue a second $500 million Panda bond in China between January and June 2027 as the government seeks to address a shortfall in refinancing Chinese commercial loans worth $1.3 billion.

According to official sources in the Finance Division cited by The News the Ministry of Finance has begun preparations for the proposed issuance without guarantees from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB). Instead the government is exploring the possibility of involving Chinese credit enhancement companies to help secure the required financing.

Pakistan had previously repaid $1.3 billion in Chinese commercial loans expecting the amount to be refinanced within a few months. Some refinancing has been arranged since then but not the full amount and Islamabad has been looking for additional funding opportunities in China’s capital market.

Pakistan entered China’s domestic bond market in May 2026 with its first Panda bond issuance supported by guarantees from the ADB and AIIB. The transaction raised 1.75 billion Chinese yuan equivalent to approximately $258 million to finance sustainable and green infrastructure projects.

The inaugural issuance helped Pakistan gain experience in meeting the requirements of China’s domestic capital market. Officials believe this experience could make the second transaction easier to execute although additional credit support may still be necessary.

A Finance Division official said the government was examining options for securing Chinese credit enhancement to facilitate the proposed $500 million bond sale without relying on guarantees from international development banks.

The first Panda bond was designed to support projects in key sectors, including water management, energy reliability, energy efficiency and healthcare. It also represented part of Pakistan’s broader strategy to diversify its financing sources and attract investment through China’s renminbi-denominated bond market.

The ADB and AIIB said the debut transaction demonstrated how partial credit guarantees could help emerging economies access domestic capital markets and mobilise private-sector financing.

The government is expected to launch the second tranche in April or May 2027 subject to the completion of preparations and financing arrangements.

If the proposed issuance proceeds as planned Pakistan’s combined Panda bond proceeds would reach approximately $758 million. The transaction could help diversify the country’s funding sources while addressing outstanding refinancing requirements.