ADB, AIIB Provide $285M Guarantees for Pakistan’s $250M Panda Bonds
Pakistan is set to enter the Chinese debt market for the first time with the help of two leading multilateral banks. The Asian Development Bank (ADB) and Asian Infrastructure Investment Bank (AIIB) have agreed to extend $285 million in guarantees, enabling Islamabad to issue $250 million worth of Panda bonds despite its weak credit profile.
According to officials, the guarantees will be finalized once Pakistan completes domestic approval procedures, including review by the Concept Clearance Committee and the Central Development Working Party (CDWP).
The support comes with conditions, as the funds must be directed towards environmentally sustainable projects. Both banks will charge between 0.8% and 1.25% in fees for their guarantees, which will be extended to foreign private lenders.
Project allocations include $76.5 million for a telemetry system on the Indus Basin, $71 million for the Power Distribution Strengthening Project, nearly $27 million for medical equipment for a cancer hospital in Islamabad, and $76 million for the Jinnah Medical Complex and Research Centre.
The ADB will guarantee up to $160 million, while the AIIB will back $125 million, together covering 95% of the bond’s principal and accrued interest. Officials noted that these guarantees are essential to secure a domestic AAA rating for the Panda bond in China, where investors demand high-grade instruments.
Despite Pakistan’s ongoing $7 billion IMF programme, external financing remains difficult. The central bank has already purchased over $8 billion locally to meet obligations. The Panda bond issuance, part of a larger $1 billion programme approved by Chinese regulators, is viewed as a step toward diversifying financing sources.
Green Financing Boost: ADB, AIIB Support $250M Panda Bonds for Pakistan
