Pakistan Raises $2.5 Billion as Eurobonds Get Oversubscribed by 2 Times

Pakistan’s dollar-denominated Eurobonds have been oversubscribed by almost two times, and the dollar bonds of five, ten, and thirty years raised $2.5 billion from the international capital market on Tuesday.

Pakistan also received the promised tranche of nearly $500 million from the International Monetary Fund (IMF) on the same day.

The government contracted a $1 billion 5-year bond at an interest rate of six percent, another $1 billion of 10 years at 7.375 percent, and about $500 million of a 30-year bond at a cut-off yield of 8.875 percent, with combined books of $5.3 billion.

The new Minister of Finance, Hammad Azhar, announced the success via an official tweet, adding that leading global investors had shown great confidence in Pakistan’s economy and future outlook.


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Analysts expect more than $2 billion from the issuance within the next few days, and the settlement date for the issue is likely to be 8 April.

Mohammad Ahsan, the Managing Director of Rates and Fixed Income at Mashreq Bank in Dubai, remarked in a post on LinkedIn that the 5-year and 10-year pricing is likely to be straight forward, given that the existing bonds offer a good benchmark and even pricing of 5.625 to 5.75 percent for a new 5-year bond that would be a significant pickup from similarly rated sovereigns including Egypt, Kenya, and Nigeria.

Currently, a Pakistan dollar-denominated bond with maturity in 2027 yields around 5.9 percent in the secondary market. Topline Research noted that the average yield over the last 3-month for the same is around 5.8 percent.

Global rating agency Fitch also assigned ‘B-’ rating to Pakistan’s proposed dollar bonds in line with the country’s downgrade last year due to fiscal deterioration.

“Fitch Ratings has assigned Pakistan’s (B-/stable) proposed foreign-currency bonds a ‘B-’ rating,” it said in a statement. “The rating is in line with Pakistan’s long-term foreign-currency issuer default rating of ‘B-’ with a stable outlook.”

The government has given an international commitment to generate more than Rs. 700 billion additional revenues through general sales tax and income tax in the coming budget. This will be achieved through an over 34 percent increase in power tariffs (about Rs. 900 billion) and the withdrawal of Rs. 140 billion worth of corporate income tax exemptions.


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The IMF board said, “Reaching the FY2022 fiscal targets rests on the reform of both general sales tax and personal income taxation,” and that “vigorously following through with the updated IFI-supported circular debt management plan and enactment of the NEPRA Amendment Act would help restore financial viability through management improvements, cost reductions, regular tariff adjustments, and better targeting subsidies”.

Before this, Pakistan had held the last issue of dollar-denominated bonds in November 2017, in which $2.5 billion had been raised by offering a 5-year Sukuk of $1 billion and a 10-year Eurobond of $1.5 billion at 5.625 percent and 6.875 percent respectively.



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