Pakistan seeks $600M in bank financing ahead of Eurobond maturity

The Pakistan government is preparing to secure an additional $600 million in long-term financing from a consortium of international banks as part of efforts to meet upcoming external debt obligations, sources familiar with the matter said.

The proposed borrowing, expected to carry an interest rate above 7% but within single digits, is being considered as an alternative arrangement to repay $1.2 billion in Eurobonds maturing in April, the sources said.

Officials at the Ministry of Finance have initiated discussions on loan terms with a consortium of global banks led by Standard Chartered. The consortium also includes Chinese lenders such as Bank of China and Industrial and Commercial Bank of China, according to the sources.

The long-term financing agreement between the Finance Ministry and commercial banks is expected to be finalized in the coming weeks.

Successful conclusion of the agreement would enable the government to secure the $600 million facility, which may be used for commodity purchases, the sources said.

There is also a proposal to include additional banks in the consortium.

Panda bond planning underway

As part of its broader financing strategy, the government is also planning the issuance of a $250 million Panda bond in March, denominated in Chinese yuan. The three-year bond is expected to carry a fixed, single-digit interest rate.

However, internal working at the Finance Ministry on the Panda bond issuance is still underway, the sources added.

IMF's upcoming visit

Separately, an International Monetary Fund delegation is scheduled to visit Pakistan from Feb. 25 to March 11 for an economic review.

Officials plan to brief the IMF on the alternative international financing arrangements. According to the sources, Pakistan’s foreign exchange reserves remain in line with targets agreed with the International Monetary Fund for the current fiscal year.

Finance Ministry officials are optimistic about proceeding with bond issuances next month as part of financial preparations to meet the April Eurobond repayment.

Analysts say the move reflects Pakistan’s continued reliance on external commercial borrowing to manage near-term debt maturities while avoiding pressure on foreign exchange reserves.

However, borrowing at rates above 7% — even within single digits — may increase debt servicing costs in the medium term.

The success of the Panda bond issuance and the outcome of the upcoming IMF review will be critical in shaping investor confidence and Pakistan’s access to international capital markets in the months ahead.