BEIJING, May 17 : Pakistan’s 1.75 billion yuan ($250 million) Panda Bond issuance in China, which achieved an oversubscription rate of more than five times, is much more than a mere financial milestone – it is a vivid testament to the profound China-Pakistan friendship and the strong confidence of Chinese investors in Pakistan’s economic recovery.
This was stated by Prof Cheng Xizhong, Senior Research Fellow at the Charhar Institute, a non-governmental Chinese think-tank on diplomacy and international studies based in Beijing.
He said that the enthusiastic market response to this three-year fixed-rate bond, with a coupon rate of 2.5%, first stems from the time-honored “iron brotherhood” between China and Pakistan. For decades, the two nations have stood firmly with each other through thick and thin. This sincere friendship, which transcends political and economic boundaries, has laid a solid foundation for financial cooperation, making Chinese institutional and individual investors eager to contribute to Pakistan’s development. Notably, the 2.5% coupon rate is not only the lowest in Pakistan’s sovereign bond issuance history but also far lower than the average 7.7% yield on its existing dollar bonds – an explicit reflection of China’s willingness to provide cost-effective financing support to its trusted partner.
More importantly, the overwhelming oversubscription sends a clear signal of Chinese investors’ firm confidence in Pakistan’s economic turnaround. Chinese investors have recognized Pakistan’s unremitting efforts in macroeconomic reform: its foreign exchange reserves, primary fiscal balance and exchange rate stability have all remained within the target range, and the CDS-implied default probability has dropped by 2,200 basis points from June 2024 to September 2025, placing Pakistan among the top in emerging markets in terms of improved sovereign credit risk. Backed by joint guarantees from the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB), the bond has obtained an AAA credit rating in China, and its proceeds are earmarked for sustainable development projects such as water resource management, energy infrastructure, and medical and health improvement—areas that are crucial to Pakistan’s long-term stability and people’s well-being, thus further enhancing its appeal to Chinese investors, he added.
Prof Cheng said that this issuance also aligns with the growing use of RMB settlement in China-Pakistan trade, which has risen from 4%-5% in the past to 24% currently, and deepens financial synergy under Phase II of the China-Pakistan Economic Corridor (CPEC). It serves not only as a supplementary financing channel for Pakistan to diversify its funding sources and reduce reliance on dollar debt but also as a vivid practice of mutual benefit between the two countries.
In essence, the success of Pakistan’s first Panda Bond issuance in China is a win-win outcome: it strengthens the unbreakable China-Pakistan friendship, injects vital impetus into Pakistan’s economic recovery, and advances the internationalization of the RMB. It fully demonstrates that friendship and trust can bridge gaps and drive mutually beneficial cooperation in the global financial landscape, he added.