Govt Finalizes Adviser for Panda Bond Auction

Pakistan has given a contract of financial adviser for the Panda bonds to a consortium of four banks – two each from China and Pakistan.

The consortium consists of Habib Bank Ltd and Citibank from Pakistan side and China International Capital Corporation (CICC) and China Development Bank (CDB). The consortium will assist the country in its first-ever Panda bond auction soon.

While there is no official word on the size of floatation, sources familiar with the development said it could be anywhere near $1.3 billion, with an initial tranche of $300 million.

Pakistan accepted proposals on March 20 and nine parties participated in the bidding process – four were shortlisted.

The shortlisted banks included Bank of China, Consortium of Industrial and Commercial Bank (ICBC) of China, Guotai Junan Securities, and Haitong Securities.

Finally, the consortium consisting of HBL, Citi, CICC, and CDB was awarded the contract.

The next phase includes roadshows and book building process – something crucial for the success of the bonds because it will determine the depth of the participation and the yields that Pakistan’s government will have to pay on the bonds.

The roadshows will target the regions where large pools of investors with RMB holdings are found, such as Beijing, Shanghai, Hong Kong, Singapore, Taiwan, and a few other cities.

There are two kinds of Panda bonds exchange-traded and those that are held by banks on their balance sheets. But, Pakistan is more likely to go for an exchange-traded bond, given Pakistan’s credit rating.