Pakistan plans second $500m Panda bond without ADB, AIIB cover

Pakistan is preparing a second $500 million Panda bond sale in China's domestic capital market for the January-June 2027 window, and this time the Ministry of Finance wants to do it without guarantees from the Asian Development Bank or the Asian Infrastructure Investment Bank.

Official sources in the Finance Division told The News, in a report carried by Daily Times and Minute Mirror, that preparations for the second phase had begun and that the government was exploring the possibility of involving Chinese credit enhancement companies in the transaction. "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 were quoted as saying.

The backdrop is a refinancing gap. Pakistan repaid $1.3 billion in Chinese commercial loans in the expectation the amount would be refinanced within a few months. Some refinancing has since been arranged, but the full amount has not been replenished, pushing Islamabad to look for additional funds in the Chinese capital market.

Pakistan entered China's domestic bond market in May 2026 with a debut Panda bond supported by guarantees from the ADB and AIIB. According to Minute Mirror, that transaction raised 1.75 billion Chinese yuan, roughly $258 million, and was directed at sustainable and green infrastructure, including water management, energy reliability, energy efficiency and healthcare.

An official told The News that the first issuance required extensive preparatory work to meet the requirements of China's domestic capital market, but that the experience gained should make a second transaction easier to execute. "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.

Minute Mirror reported that the government expects to launch the second tranche in April or May 2027, subject to preparations and financing arrangements being completed, and that if the sale proceeds as planned, combined Panda bond proceeds would reach about $758 million. The outlet also reported that the ADB and AIIB described the debut transaction as a demonstration of how partial credit guarantees can help emerging economies reach domestic capital markets and mobilise private-sector financing.

No pricing, profit rate or cost for the proposed borrowing has been disclosed in the reports.