Pakistan Plans First Yuan-Denominated Bond Issue of 1.75 Billion Yuan

Pakistan is preparing to issue yuan-denominated bonds in China’s onshore market for the first time. The total value of the bond issue is expected to be up to 1.75 billion yuan, which is around 257 million US dollars.

According to sources, these will be three-year sustainable development bonds. The issuance could be priced as early as next week, although final details are still being worked out and may change.

A major feature of this plan is that the Asian Infrastructure Investment Bank and the Asian Development Bank will jointly provide a guarantee covering 95% of the total bond value. This guarantee is expected to reduce risk and attract investors.

Experts say interest in China’s “panda bonds” has increased in recent months. In the first quarter of this year, panda bond issuance reached a record 84.2 billion yuan, which is double compared to the same period last year. Lower borrowing costs and growing use of the Chinese yuan globally are seen as key reasons behind this rise.

China’s bond market has remained stable, with the 10-year government bond yield holding at around 1.757% recently, showing steady investor confidence.

Other countries in the region are also showing interest in similar financing. Indonesia’s finance minister has indicated plans to issue panda bonds as well.

Analysts say more governments are turning to China’s onshore market due to global financial uncertainty, as it is seen as a relatively stable source of funding during ongoing geopolitical tensions.