The Government of Pakistan plans to raise approximately $1 billion through Eurobonds within the next two months, said Ministry of Finance Special Secretary, Kamran Afzal. This will be the first capital market transaction by the current government.
These sovereign bonds aim to raise foreign exchange before the repayment of previous debts. Pakistan needs to repay approximately $4 billion to the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE), along with loans from other global lenders.
Kamran Afzal further informed that 10 leading banks have submitted their financial and technical bids to structure the bond issue. The actual size of the issue will be determined after taking into account the external financing needs along with the interest rates offered by the investors.
Banks from Europe, America, Gulf, China, and a local bank have submitted technical and financial bids for the contract of financial advisers to float the sovereign bond. These include Standard Chartered Bank, JP Morgan, Citibank, Credit Suisse Deutsche Bank, Bank of America, Meezan Bank, Bank of China, Dubai Islamic Bank, and Emirates NBD, Express Tribune reported on Thursday.
The upcoming transaction will prove to be a test case of the country’s claim of international recognition of its improved economic conditions, the newspaper opined.
As per news reports, Pakistan will likely hire two consortiums to structure and float these Eurobonds. For this purpose, the submitted bids will be evaluated in the upcoming week.
The Special Secretary Finance also informed that the government will issue Eurobond in the first phase, and Islamic bonds will be issued in the second phase if suggested by the financial advisers.
The Finance Secretary stated that Pakistan’s inflows position remains comfortable despite the repayment of loans. The Federal Minister for Industries also said on Wednesday that the interpretation of the SBP’s foreign exchange reserves figures done by some mainstream media is flawed, and Pakistan continues to have the rollover facility under the IMF program to pay back the borrowed loans.