Pakistan has secured $285 million in guarantees from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) to raise $250 million in debt through its first-ever Panda bond issuance in China.
The guarantees, aimed at overcoming Pakistan’s poor credit rating, will back 95% of the bond’s principal and interest obligations, according to a report by Express Tribune.
The ADB will provide $160 million in guarantees, while the AIIB will cover $125 million. Both lenders have conditioned their support on the funds being used for green and sustainable projects, including a telemetry system for the Indus Basin, power distribution upgrades, and medical infrastructure.
The Panda bond, part of a $1 billion programme, will be issued on China’s interbank market with a three-year tenor and a fixed-rate coupon of 3-4%. Backed by AAA-rated guarantees, the bond is expected to attract institutional investors at a lower cost.
Despite the IMF’s $7 billion bailout, Pakistan’s reliance on multilateral guarantees highlights ongoing challenges in accessing international debt markets. The issuance is targeted for completion by December 2025, pending regulatory approvals.
Editorial & Legal Practice Group
Authored and reviewed by the corporate law and tax litigation practice group at Javid Law Associates. Our team comprises High Court advocates, corporate legal advisors, and authorized tax practitioners across Pakistan.
Advocates High Court & Tax Counsel
Jurisdiction: Pakistan