Pakistan is gearing up to raise around $750 million in the coming weeks through a mix of commercial financing and its first-ever Panda Bond issuance, as the government seeks to reinforce foreign exchange reserves before meeting debt obligations and entering a critical International Monetary Fund (IMF) review.
According to official sources, Islamabad is in discussions with a consortium of international banks, including Deutsche Bank and Standard Chartered, to arrange between $300 million and $500 million in commercial borrowing. The proceeds will be used to cover the upcoming repayment of a $500 million Eurobond maturing on September 30, 2025. The financing arrangement is seen as essential to ensure Pakistan meets its external debt commitments without eroding reserves.
Alongside the commercial loan, the government is preparing to issue its inaugural Panda Bond valued at $250 million, denominated in Chinese renminbi. The bond, expected to launch in November, will be privately placed on China’s Interbank Bond Market. It will be backed by guarantees from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB), enabling Pakistan to secure a favorable domestic credit rating in China despite its lower international rating status.
The Panda Bond will have a three-year maturity period and is expected to carry a fixed-rate, single-digit coupon. The guarantee structure is designed to provide comfort to investors, covering up to 95 percent of both principal and interest obligations. The guarantee cap stands at $285 million, of which $160 million will be provided by the ADB and $125 million by the AIIB. This credit enhancement mechanism ensures Pakistan attains a AAA rating within the Chinese domestic market, significantly reducing borrowing costs.
Habib Bank Limited and China International Capital Corporation have been appointed as advisors for the bond issuance, reflecting Pakistan’s strategy of leveraging both domestic and international expertise in structuring its entry into the Chinese debt market. For policymakers, this first Panda Bond represents a diversification of financing sources and a step toward deepening financial ties with China’s capital markets.
The fundraising push comes just as an IMF mission arrives in Karachi on September 25 to review Pakistan’s economic program. The IMF delegation will hold discussions with the State Bank of Pakistan (SBP), the Overseas Investors Chamber of Commerce & Industry (OICCI), and the Pakistan Business Council (PBC). The mission is expected to assess the government’s external financing strategy, fiscal reforms, and compliance with targets under the IMF-supported program.
Analysts note that the successful placement of Pakistan’s first Panda Bond could open the door to future issuances in renminbi, giving the country greater flexibility in managing its debt portfolio. For Pakistan, tapping China’s Interbank Bond Market also signals an important shift toward accessing alternative global funding avenues at a time when traditional markets remain challenging due to higher risk premiums.
The combination of commercial borrowing and the Panda Bond launch underscores the government’s attempt to balance short-term financing needs with long-term market diversification. If executed smoothly, the initiative may not only help Pakistan meet its immediate repayment obligations but also strengthen investor confidence in its evolving debt strategy.
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