ISLAMABAD: Pakistan’s finance minister Muhammad Aurangzeb said this week the government plans to issue its first Panda bond, a renminbi-denominated instrument sold in China’s domestic market, before the Chinese New Year in February, adding that moderating inflation could allow the benchmark interest rate to return to single digits during the ongoing fiscal year.
The minister’s remarks come in the backdrop of Islamabad’s efforts to re-enter global capital markets after years of external shocks, liquidity pressures and repeated balance-of-payments crises. Pakistan is operating under a $7 billion, 37-month bailout program with the International Monetary Fund that requires fiscal consolidation, stronger tax collection and structural reforms across energy, state-owned enterprises and the investment climate.
Alongside the planned Panda bond, the government has refreshed its Global Medium Term Note (GMTN) program, the legal structure to issue Eurobonds and Islamic sukuk, as it seeks to broaden access to international investors and reduce reliance on dollar markets.
In an interview to Arab News, Aurangzeb said two non-deal roadshows had already been completed for the inaugural Panda issuance and credit enhancement — multilateral guarantees that lower risk for investors — had been approved by the Asian Development Bank, with the Asian Infrastructure Investment Bank expected to follow shortly. He said regulatory clearances with China’s central bank and securities regulator were also progressing.
