Arab Energy Fund Gets China Approval for $1.4 Billion Panda Bond Program
The Arab Energy Fund (TAEF) has received official approval from Chinese regulators to raise up to $1.4 billion (10 billion yuan) by issuing Panda Bonds in China. These bonds will be issued in China’s local currency, the renminbi.
This approval makes the Arab Energy Fund the first multilateral financial institution from the Middle East and North Africa (MENA) region to enter China’s domestic bond market.
Flexible funding plan
The bond program will run for two years starting from the approval date. During this time, the fund can issue bonds in several stages, depending on market conditions. If the fund moves ahead, this will be its first Panda Bond issuance.
The approval was granted by the National Association of Financial Market Institutional Investors (NAFMII) after a review under China’s interbank bond market rules.
The Arab Energy Fund is backed by Arab governments, including Saudi Arabia and the United Arab Emirates. The fund said the new program will help it diversify its funding sources and give it a reliable way to raise money directly in Chinese currency.
Benefits of the China market
Raising money in China also supports the fund’s long-term financial planning, especially at a time when borrowing costs in China are very low. Last year, the average interest rate on Panda Bonds dropped to a record low of around 2.1%. This is much cheaper than borrowing in US dollars.
By accessing China’s onshore bond market, the fund can lower its financing costs and reduce its dependence on other international markets.
What the fund says
“This is an important step for us,” said Vicky Bhatia, Chief Financial Officer of the Arab Energy Fund. He explained that the approval allows the fund to reach a large group of Chinese investors while building stronger ties with China’s capital markets.
He also said the fund may issue its first Panda Bond later this year, depending on market conditions.
Investment and growth plans
The Arab Energy Fund has been operating for over 50 years and has strong governance and high international credit ratings. It invests in energy-related projects, including traditional energy, energy infrastructure, and new energy solutions.
Recently, the fund has increased its focus on private equity and project finance. This includes investments in off-grid energy and new and emerging energy technologies.
According to a Bloomberg report, the fund plans to increase its total investments by 60%, reaching $12 billion over the next three years.
Growing China–Gulf ties
The Panda Bond program also shows the growing economic and financial relationship between Gulf countries and China. Trade between China and the Gulf reached $257 billion in 2024 and is expected to grow further in the coming years.
For any Panda Bond sale, China International Capital Corporation and Bank of China will act as joint lead underwriters, according to regulatory filings.
Published: 22th January 2026
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