Pakistan plans more panda bonds, studies Japan samurai debut after $261m yuan deal

Finance Minister Muhammad Aurangzeb has said Pakistan plans to return to China's panda bond market regularly and is studying Japan's samurai bond market for the first time, as the government looks to diversify its sources of foreign financing. He spoke to Nikkei Asia on Monday on the sidelines of the annual meetings of the International Monetary Fund and the World Bank in Bangkok, which opened the same day.

A panda bond is a yuan-denominated bond sold in China by a foreign borrower. Aurangzeb said Pakistan's first such issue, sold in mid May 2026, will not be a one-off. That sale raised 1.75 billion yuan, about $261 million, under a wider 7.2 billion yuan programme, and carried partial guarantees from the Asian Development Bank and the Asian Infrastructure Investment Bank. He called China the second largest and deepest capital market in the world.

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What samurai bonds would mean

A samurai bond is a yen-denominated bond issued in Japan under Japanese rules. Aurangzeb said such an issue "would make sense" for Pakistan but that the idea "needs more homework" and careful thought. No amount or timeline has been set. He also said the government does not want to increase the overall size of its external debt, signalling that new market entries would fit inside existing borrowing limits rather than add to them.

A growing market

The timing fits a strong global trend. S and P Global data cited in the reporting puts panda bond issuance at about 160 billion yuan, or $23.8 billion, in the first half of 2026, up 68 per cent from a year earlier. Foreign issuers now account for 50 per cent of the market, against 39 per cent last year.

Same-day context in Bangkok

The interview landed as Finance Secretary Imdad Ullah Bosal met a Citibank delegation in Bangkok on Tuesday to discuss diversifying Pakistan's financing sources in local and foreign currencies, according to Mettis Global News. Citibank noted the conclusion of the fourth IMF review and the staff-level agreement, along with improving economic indicators and sovereign rating upgrades.

In a separate Bloomberg TV interview on October 12, Aurangzeb laid out the recent borrowing record: Pakistan raised $750 million through a private bond in April, its first international borrowing after a four year hiatus, and about $3 billion in Eurobonds roughly three weeks ago, where bids came in at twice the offered amount. He said $250 million in panda bonds had been issued under a $1 billion programme, that mandates had been awarded for Islamic Sukuk and dollar-payable rupee bonds, and that tokenisation of Eurobonds was under consideration. The sovereign rating has been upgraded three times since April 2025 and now sits in the B category, with B-plus seen as possible by the start of the next fiscal year.

Why it matters

Diversifying creditors matters because Pakistan's external financing still leans heavily on a small set of bilateral and multilateral lenders. Tapping Asian capital markets in yuan and yen could spread that risk and, in good market windows, lower borrowing costs. For ordinary Pakistanis, cheaper and steadier external financing feeds through to the budget, the currency and eventually to inflation and interest rates at home, though none of that is guaranteed and actual bond pricing will decide how much of the promise materialises.

Sources: Mettis Global News https://mettisglobal.news/Pakistan-hints-at-more-panda-bonds-samurai-bond-debut-64154, Bloom Pakistan https://bloompakistan.com/aurangzeb-eyeing-asian-bonds-to-diversify-funding/, Mettis Global News https://mettisglobal.news/Finance-Secretary-Citibank-explore-ways-to-diversify-Pakistans-financing-sources-64152, Mettis Global News https://mettisglobal.news/Pakistan-targets-B-credit-rating-longerterm-debt-Muhammad-Aurangzeb-64140