After a successful comeback to the international bond market last year, Pakistan issued a new Eurobond of $500 million to raise funds, as the country’s economy gained traction on the back of rising growth and foreign exchange reserves.
The 10-year bond has a coupon rate of 8.25 percent, the same that was offered for similar bonds issued in April last year. The new bond was launched after successful roadshows in England, and in three cities of the United States – Los Angeles, Boston and New York. The pricing was announced on Sept. 24.
The issue was twice over-subscribed in spite of a tight and weak global market conditions and jittery investors’ sentiments due to economic downturn in China and uncertainty created by Fed’s decision to delay a long-anticipated rate hike.
But, Pakistan’s finance ministry with the consent of Prime Minister Nawaz Sharif, decided to restrict the issue to the intended amount of $500 million to cover the forthcoming maturity in March 2016 of a bond issued in 2006, according to an official announcement.
Pakistan retuned to the global capital market in April last year, after the gap of seven years, with the sale of $2 billion in sovereign bonds against an offer of $7 billion from global investors, several of them based in the U.S.
Since then the government has sold shares in Pakistan Petroleum Limited (PPL), the country’s major natural gas supplier and three banks, including the Habib Bank Limited in April this year which raised $1.02 billion, the biggest so far in the divestment plans.
Pakistan also plan to offer government’s shares in Mari Petroleum and Pak Arab Refinery Limited by end-2015.
After years of slow-growth, South Asia’s second-biggest economy is gaining traction and grew by 4.5 percent in the year that ended on June 30. Pakistan is aiming for 5.5 growth in the current fiscal year. Reforms being carried out under an IMF program secured in 2013 has helped stabilized the economy.
The country’s foreign exchange reserves are also on a record high and were at $18.7 billion as of Sept. 11, according to a central bank statement.
Global rating agencies Standard & Poor’s and Moody’s Investors Services also upgraded their credit outlook on Pakistan’s debt to positive from stable this year.