Pakistan to sell Panda Bonds in China for the first time in June

Pakistan plans to enter the Chinese capital market for the first time by selling Panda Bonds worth $200 million in June, Finance Minister Mohammad Aurangzeb announced in an interview with Chinese TV.

The move aims to diversify from the country's over-dependence on the U.S. dollar.

"We just want to make sure that we are also present in the second largest and second deepest capital market in the world," Aurangzeb said.

The government also plans to invite more Chinese investment in various sectors under the China-Pakistan Economic Corridor (CPEC) Phase II implementation.

During recent bilateral talks in Hong Kong, Pakistani officials invited companies to invest in Pakistan. Hong Kong will soon send a delegation to work out modalities and explore avenues for trade and investment.

Panda bonds are debt securities issued by foreign entities in the Chinese capital markets and are denominated in Chinese yuan (RMB). These bonds allow foreign issuers, including multinational corporations, international financial institutions, and sovereign governments, to access capital from Chinese investors.

In September, Pakistan signed a three-year $7 billion aid package deal with the International Monetary Fund (IMF) to "cement macroeconomic stability and create conditions for stronger, more inclusive, and resilient growth."

In July, global rating agency Fitch upgraded Pakistan's long-term foreign-currency issuer default rating (IDR) to CCC+ from CCC, while Standard & Poor's (S&P) maintained its rating of CCC+.

Pakistan has undergone 25 loan programs over half a century, with the IMF insisting on "durable reforms in key areas of the energy sector, tax collection, and state-owned enterprises to end a cycle of indebtedness."

The State Bank of Pakistan (SBP), while lowering its key interest rate to 13% in December, cited improved growth prospects and proper management of inflationary and external account pressures. The SBP is set to announce its decision for another rate cut on January 27.