Pakistan recently borrowed an additional $1 billion through a three-phase Eurobond issuance that raised $2.5 billion in March 2021.
The bonds were used to purchase more than $3 billion in bonds for 5, 10, and 30 years, according to the report.
Pakistan has agreed to accept $300 million for 5 years at 5.875 percent, $400 million for 10 years at 7.12 percent, and $300 million for 30 years at 8.450 percent.
With the introduction of the Global Medium Term Note (MTN), Pakistan has taken a program-oriented strategy, according to Fahad Rauf, head of research at Ismail Iqbal Securities, in order to manage the market on a regular basis.
MTNs allow designated or designated dealers to raise funds from investors on a long-term or short-term basis, with each bond being registered only once.
Under MTN, however, the issuer can easily access global markets to raise capital.
Pakistan has set a beginning price of 6.125 percent for a five-year Eurobond note due in 2026, 7.375 percent for a ten-year note due in 2031, and 8.875 percent for a 30-year note due in 2051.
“Intervention is critical because global interest rates are low and the market is flooded with liquidity,” he said.
Fahad Rauf further stated that Pakistan’s external financing needs are expanding, with a target of $5.5 billion in net external financial assistance from commercial sources for FY22, of which Rs 3.5 billion will be raised through a Eurobond or Sukuk offering. The focus is the dollar.
The IMF programme is also on hold, which might make future fundraising difficult.
According to Fahad Rauf, it is better now that the moment has come to manage the markets because Pakistan’s external account is in better shape, but the expanding trade deficit in the future indicates that some pressure will be felt.
Pakistan floats green Eurobond
Pakistan officially released its first Green Euro in May of this year (Indus Bond).
In May 2021, WAPDA issued a Green Euro (Indus Bond) on the London Stock Exchange.
For the Diamer Bhasha and Mohmand Dams, a green Euro (Indus Bond) has been issued.
WAPDA’s secure financial situation was used to issue the Green Eurobond, rather than state guarantee.