- Partial refinancing leaves $1.3bn in Chinese loans unreplenished.
- Debut Panda bond raised 1.75bn yuan for green infrastructure.
- Second tranche could take total Panda bond proceeds above $750m.
ISLAMABAD: Pakistan is weighing a second $500 million Panda bond sale in China during the second half of the current fiscal year from January to June 2027, as it struggles to secure full refinancing for $1.3 billion in Chinese commercial loans, The News reported on Tuesday.
“The Ministry of Finance has started preparations for the second phase of the Panda bond to raise $500 million in the Chinese market without guarantees from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) within the current fiscal year. The government is exploring the possibility of involving Chinese credit enhancement companies in the transaction,” top official sources in the Finance Division told The News on Monday.
Pakistan had repaid $1.3 billion in Chinese commercial loans amid expectations that the amount would be refinanced within a few months. Although some refinancing has subsequently been secured, the entire amount has yet to be replenished, prompting Islamabad to step up efforts to raise additional funds through the Chinese capital market.
Pakistan launched its first Panda bond in May 2026 with support from the ADB and AIIB, which provided guarantees to facilitate the country’s entry into China’s domestic bond market. The government has since indicated its intention to issue a second tranche during the current fiscal year.
“We are exploring options for launching the second phase of the Panda bond without guarantees from international lenders such as the ADB and AIIB,” the sources said.
According to an official, Pakistan has gained valuable experience from its debut issuance, although the first transaction required extensive preparatory work to meet the requirements of China’s domestic capital market. The government is now considering support from Chinese credit enhancement institutions to facilitate the proposed $500 million issuance.
“We now have the experience, and some form of Chinese credit enhancement is likely to be used to raise $500 million through the second phase in the coming months,” the official said.
In May 2026, the ADB and AIIB collaborated to support Pakistan’s first Panda bond issuance to finance its Sustainable and Green Infrastructure Project. The bond, worth 1.75 billion Chinese yuan (approximately $258 million), marked Pakistan’s debut in the renminbi-denominated bond market.
The issuance used guarantees to help Pakistan access China’s domestic capital market. According to the development banks, it was the first bond with less than full guarantee coverage to achieve a domestic AAA rating, setting a precedent for the use of partial credit guarantees to mobilise private-sector capital for emerging markets.
The proceeds from the inaugural issuance were earmarked for national priorities, including water governance, energy reliability and efficiency, and healthcare capacity. The transaction also formed part of Pakistan’s efforts to mobilise financing for sustainable and green infrastructure while diversifying its access to international capital markets.
The second issuance is expected to be launched in April or May 2027, with a target of raising $500 million. If completed as planned, the two issuances would bring Pakistan’s total Panda bond proceeds to approximately $758 million, or more than $750 million, during the current fiscal year.
