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Pakistan announces to launch renminbi-denominated Panda Bond
Pakistan cabinet on December 25, 2018 first time approved launching of Panda Bond in Chinese-denominated Yuan currency.
According to the Pakistani media, the possible transaction size will be equivalent to $500 million in two different tranches in order to finance its yawning trade deficit with China.
Pakistan’s trade deficit with China stood at around 12 billion dollars per annum and it is asking for Asean level tariff reduction on its exportable items.
Through this bond, Pakistan to raise loans from China’s capital markets, as the country moved a step forward to give the Chinese currency a status at par with the US dollar.
As per the Pakistani Government, the Panda bonds will help the government diversify investor base of capital market issuance and provide a source of raising Renminbi.
The Philippines has also raised RMB1.46 billion through renminbi-denominated bonds.
After United States and Japan, the China’s bond market is the third largest in the world and has an estimated market size of $11.8 trillion. The Panda bonds, Yuan-denominated debt issued by foreign borrowers, make up a small fraction of China’s $11 trillion dollar onshore bond market.