Pakistan is preparing to raise $500 million from China’s domestic bond market in 2027, seeking to secure fresh financing without relying on guarantees from the Asian Development Bank (ADB) or the Asian Infrastructure Investment Bank (AIIB).
The proposed issuance comes as Islamabad struggles to fully refinance $1.3 billion in Chinese commercial loans that it had repaid earlier, expecting the amount to be replenished through refinancing.
Although some funds have since been secured, the full amount remains outstanding, prompting the government to explore alternative financing avenues.
Pakistan Explores Chinese Credit Enhancement Support
The Ministry of Finance has begun preparations for the second phase of Pakistan’s Panda bond program, with the issuance expected during the second half of the current fiscal year, between January and June 2027, according to officials familiar with the matter.
The government is considering involving Chinese credit enhancement institutions to support the transaction, potentially allowing Pakistan to access the market without guarantees from international development lenders.
Officials said Pakistan had gained valuable experience from its debut Panda bond issuance in May 2026, although the first transaction required extensive preparation to meet the requirements of China’s domestic capital market.
“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,” an official said.
Pakistan’s First Panda Bond Raised $258 Million
Pakistan entered China’s renminbi denominated bond market in May 2026 through a 1.75 billion yuan issuance, equivalent to approximately $258 million, backed by guarantees from the ADB and AIIB.
The inaugural bond was issued to finance the Sustainable and Green Infrastructure Project, marking Pakistan’s first access to China’s domestic capital market.
The development banks said the transaction was the first bond with less than full guarantee coverage to achieve a domestic AAA rating, establishing a precedent for using partial credit guarantees to attract private sector investment in emerging markets.
Second Issuance Expected in April or May 2027
Proceeds from Pakistan’s first Panda bond were earmarked for infrastructure and development priorities, including water governance, energy reliability and efficiency, and healthcare capacity.
The government is also seeking to diversify its financing sources and mobilize funds for sustainable and green infrastructure through the Chinese capital market.
The second issuance is expected to take place in April or May 2027, with a target of $500 million. If completed as planned, Pakistan’s two Panda bond issuances would generate approximately $758 million in total proceeds during the current fiscal year.
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