Pakistan’s sovereign bonds have been upgraded by Barclays from ‘underweight’ to ‘market weight’ after the International Monetary Fund (IMF) announced a staff-level agreement (SLA) with Pakistan, reported Bloomberg.
Credit analyst Avanti Save said in a note that the $3 billion bailout will cool off payment pressures and allow Pakistan to access international and bilateral financing.
The analyst opined that since recent developments with the IMF have exceeded expectations, Pakistani sovereign bonds expiring in 2025, 2026, 2027, and 2031 are recommended.
This comes as the bonds trade at a lower price than comparable emerging market peers that have not yet defaulted.
The IMF SLA, which comes after an eight-month delay, offers some relief to Pakistan, which has been grappling with a severe balance of payments crisis and declining foreign exchange reserves. The $3 billion bailout in question is based on a stand-by arrangement that gives Pakistan breathing room ahead of the General Elections while minimizing the possibility of a debt repayment crisis.
The deal is subject to approval by the IMF Executive Board, with its consideration expected by mid-July, said an earlier statement issued by the lender.
