Barclays Upgrades Its Outlook on Pakistan

Barclays Bank Plc has upgraded Pakistan’s sovereign dollar bonds to an “overweight” rating, reversing a downgrade made in May and citing an improved outlook for oil markets and the country’s strengthening external position, according to Bloomberg.

Pakistan’s resilience cannot be ignored and recent economic developments support a more optimistic view. Barclays noted that Pakistan’s economy continues to show stability, supported by an improved fiscal position, relatively steady foreign exchange reserves, stronger external buffers, and a moderate growth and inflation outlook.

The bank also highlighted Pakistan’s access to multilateral and bilateral financing, saying these backstops remain intact as the country’s geopolitical position continues to hold strategic importance for Central Asia and the Middle East.

Barclays recommended buying Pakistan’s sovereign dollar bonds maturing in 2031, 2036, and 2051, along with the 2031 bond issued by the Water and Power Development Authority. At the same time, it advised investors to sell five-year Pakistan credit default swaps.

While acknowledging that sovereign credit rating upgrades have taken longer than expected, Barclays said it believes rating agencies are likely to review Pakistan positively during the second half of 2026.