ISLAMABAD: Pakistan has initiated the process of issuing a US dollar-denominated dual-tranche Eurobond with maturities of 5 and 10 years, representing a significant step toward enhancing its access to international capital markets.
The proposed transaction remains subject to market conditions, while the size, pricing, and final yields will be determined by investor demand and prevailing market conditions.
Khurram Schehzad, adviser to the finance minister, stated that the proposed issuance demonstrates Pakistan's renewed engagement with international investors, following improvements in sovereign credit ratings and key macroeconomic indicators.
“The proposed transaction is subject to market conditions and represents another step in Pakistan’s renewed access to international capital markets,” Schehzad said in a post on X.
The planned issuance comes less than five months after Pakistan returned to the international bond market following a four-year absence.
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In April, Pakistan initially raised $500 million through a three-year Eurobond under its Global Medium-Term Note Program at a coupon of 6.975%. Strong investor demand subsequently allowed the government to increase the issue to $750 million through a $250 million green shoe option.
The bond is scheduled to mature in April 2029.
Pakistan had also repaid a $1.4 billion Eurobond that matured in April, helping the government re-establish a pricing benchmark in international debt markets after years of relying heavily on multilateral, bilateral and commercial financing.
Pakistan's improved ratings
The latest transaction is also backed by recent ratings assessments.
S&P has assigned a ‘B’ rating to Pakistan’s Global Medium-Term Note Program and the proposed benchmark US dollar notes, in line with the sovereign rating.
Fitch Ratings has assigned the GMTN program a ‘B-’ rating, with a Recovery Rating of ‘RR4’, which is also in line with Pakistan’s long-term sovereign rating.
Unlike April’s three-year issue, the proposed five- and 10-year bonds would extend Pakistan’s maturity profile and test international investors’ willingness to hold Pakistani sovereign debt over longer periods.
The transaction will therefore provide an important market test of investor confidence in Pakistan’s improving macroeconomic position and its ability to sustain access to international financing.