Islamabad August 1 2024: Pakistan has received five bids from Chinese firms to help it raise funds via Panda bonds as the nation pushes ahead with plans to return to global capital markets following progress toward shoring up its finances.
The government had gotten three offers from law firms and two from credit rating agencies by the time its deadline for proposals expired, the finance ministry said in a text message. Two Pakistani firms had also shown interest to work as domestic legal counsels for issuing the bonds, it said. The ministry said it was evaluating the proposals before making a final selection.
Fitch raised Pakistan’s credit rating to CCC+ from CCC this week, citing reduced risks from external funding after the country secured a new bailout from the International Monetary Fund. S&P reaffirmed the nation’s long-term foreign currency debt rating at CCC+ on Tuesday.
Pakistan reached a new $7 billion loan deal with the IMF last month, though it still needs to be approved by the fund’s executive board, which is almost always a formality.
The government said earlier this year it’s seeking to raise as much as $300 million from issuing bonds to Chinese investors for the first time. Selling yuan-denominated debt will allow the country to diversify its funding sources and reach investors in a new market, finance minister Muhammad Aurangzeb said in March.
Pakistan’s government has taken a number of steps to improve its finances, including raising taxes and energy prices to boost revenues and also planning to offload shares in state-owned companies such as Pakistan International Airlines and power distribution firms.
Emboldened by the positive commentary from rating agencies, the government is also looking ahead to future fund raising in Europe and the US.
“China will support the Panda bond,” Aurangzeb said Monday in a video message. “Ultimately we’ll have to get to the euro bonds and we’ll have to get back to the U.S. market.”
