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.
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