Hammad Azhar announces launch of Pakistan’s ‘first ever’ three-tranche capital market transaction

'first ever' three-tranche capital market transaction

Pakistan’s “first ever” three-tranche capital market transaction is going to be launched. The launch happened the same day Hammad Azhar was entrusted with the finance ministry portfolio. 

The newly appointed Finance Minister Hammad Azhar announced the launch of Pakistan’s “first ever” three-tranche capital market transaction on Wednesday, saying it reflected investors’ trust in Pakistan’s economy.  

He took on Twitter and posted, “Pakistan has very successfully concluded its first ever 3-tranche capital market transaction yesterday. With 5, 10 and 30 year Eurobonds at 6%, 7.375% and 8.875%, leading global investors showed great confidence in our country’s economy and future outlook.” 

Moreover, according to analysts, Pakistan’s dollar-denominated Eurobonds were oversubscribed by almost two times after receiving a positive response from investors due to the attractive interest rates. Analysts forecast the country to raise $2 to $2.5 billion through conventional bonds with tenors of 5, 10 and 30 years. 

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Price guidance was 6% for five-year, 7.375% for 10-year and 8.875% for 30-year bonds with combined books of $5.3 billion, said Karachi-based Topline Research CEO Mohammad Sohail who expected more than $2 billion from the issuance in next few days. 

The settlement date for the issue is likely to be April 8, 2021. 

“It’s the 30-year tranche, which presents some challenges in terms of appropriate issue size and reoffer yield,” Ahsan wrote in a LinkedIn post. 

Currently, Pakistan dollar-denominated bond with maturity in 2027 yields around 5.9% in the secondary market. The average yield over the last 3-month period for the same is around 5.8%, Topline Research said. 

“We believe this re-entry of Pakistan in international capital markets will support investor sentiments. Regardless of the yield, the size of these bonds will provide much-needed support to Pakistan’s foreign exchange reserves that are currently adequate for 3 months of imports,” Topline Research said in flash note. 

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