Eurobond or Sukuk bond issuance ruled out, government adopts alternative strategy

Islamabad: The government has ruled out the possibility of issuing Eurobonds or Sukuk bonds during the current fiscal year and has adopted an alternative strategy and is ready to issue the first phase of Panda Bonds in the Chinese market, through which $250 million will be raised.
According to sources, this Panda Bond is likely to be issued in mid-January 2026, the Prime Minister’s Office has given formal approval for this issuance by January 31. The second phase under this program, which will be worth $500 million, is expected to be completed before June 30, 2026.
Highly government sources told The News that the Panda Bonds are expected to be issued at an interest rate of about 4%. Pakistan has to make two major payments due to the maturity of the Eurobonds in the current fiscal year. The first installment of $500 million has been paid in September 2025, while the second payment is due in April 2026, totaling $1.3 billion ($1 billion principal and $300 million profit).
On the other hand, the IMF also expressed some reservations about the government’s intention to issue Panda Bonds in the Chinese market and raised the question of why the government does not prefer to take commercial loans if Chinese banks will be the major buyers of Panda Bonds? Pakistani officials informed the IMF that the government wants to diversify its sources of financing and Panda Bonds are being issued to deepen its presence in the Chinese market.