Pakistan has approved the launch of Panda Bond in Chinese Yuan currency. For the first time in Pakistan’s history, it has been approved to launch Panda Bond in Yuan. Its transaction size will be almost equal to $500 million. It will be in two parts to aid in recovering the trade deficit with Beijing.
Must read: Pakistan approved trade in Yuan with China
The trade deficit of Pakistan with China stands at $12 billion per annum and Pakistan has asked for the Asean level tariff reduction on its export products. Recently China agreed to grant market access to Pakistan that will help in boosting the exports of Pakistan to China.
Official spokesperson and Finance Ministry Adviser Dr Khaqan Najeeb said that the government is working to reduce the foreign financing needs and build the foreign exchange reserves. Thus he revealed that the approval of Panda Bond is part of this strategy.
Adding on that the Panda bonds will aid the government in diversifying the investor base of the capital market issuance and help in raising Renminbi. On the basis of the market response at the time of the issuance, the size, price and tenor will be decided. In many rounds the issuance will be done. Due to high interest shown by Chinese banks and investment groups, a good response is expected.
According to sources, “The timing of launching the bond has importance and now the government has decided to explore this option in the second half of the current fiscal year.”
Adding, “The Chinese Renminbi-denominated Panda Bond will be accomplished in two tranches in Shanghai (China) and expected to fetch half a billion dollars.”