Panda Bonds are onshore renminbi-denominated bonds issued in the People’s Republic of China by non-Chinese entities and serve as a capital-raising platform for foreign countries or companies targeting Chinese investors.
With an aim to improve the financial stability of a cash-strapped country which is grappling with several other challenges such as high inflation and declining forex reserves, Pakistan has sought cooperation from Chinese institutional investors to launch Panda Bonds to raise between $250 million and $300 million initially.
Federal Minister for Finance and Revenue Muhammad Aurangzeb discussed the plan with the Governor of the People’s Bank of China (PBoC) Pan Gongsheng during a meeting in Beijing, covering a wide range of economic issues on Friday.
Panda Bonds are a type of bond issued in China by foreign entities, denominated in renminbi, and targeted at Chinese investors. They serve as a platform for foreign countries and companies to raise capital in China’s domestic market. Unlike Dim Sum Bonds, which are also renminbi-denominated but issued in Hong Kong for foreign investors, Panda Bonds are specifically sold in China and subject to domestic regulations.
Pakistan aims to tap into this market by issuing Panda Bonds, thereby diversifying its funding sources and bolstering its foreign exchange reserves through Chinese investment.