Pakistan has raised $3 billion via a dual-tranche Eurobond issue, which represents the largest international bond issuance by Pakistan in a single transaction.
According to the Ministry of Finance, the transaction received nearly $6 billion in orders, almost double the size of the issuance, indicating strong interest from institutional investors from Asia, the Middle East, Europe, and the United States.
Details of How Pakistan Secured the $3 Billion
The transaction involved a dual-tranche issue of Eurobonds with varying maturity periods.
| Bond | Amount | Maturity Period | Coupon |
| First tranche | $1.75 billion | 5½ years | 7.50% |
| Second tranche | $1.25 billion | 10 years | 7.90% |
According to the Finance Ministry, the strong subscription to the 10-year period demonstrates Pakistan’s capacity for raising long-term finance.
This is the first issuance under Pakistan’s reconstituted Global Medium-Term Note Program, coming after the country’s first-ever Panda Bond issuance.
Importance of Eurobond for Pakistan
The government believes that there is more to this deal than acquiring additional debt. Pakistan aims to diversify funding sources while prolonging the maturity of the debt and mitigating the risks of rollover and refinancing.
Muhammad Aurangzeb, the country’s finance minister, stated that this deal symbolises the confidence that Pakistan has received after rating upgrades on multiple occasions.
Other financing instruments that the country has been exploring include Sukuk, rupee-denominated dollar bonds, and panda bonds in an attempt to substitute short-term costly borrowing with long-term finance.
Future Prospects of Pakistan
According to the Finance Ministry, this bond issue was associated with economic stabilization and reform over the past three years and increased confidence of investors in Pakistan. However, it was pointed out that fiscal discipline, reforms, competitiveness, investments, and improved productivity are needed further.
In addition, a very low fiscal deficit was observed by Pakistan, which was its lowest for 22 years.
Conclusion
The issuance of $3 billion worth of Eurobonds by Pakistan, which is the largest ever issue by the country, is enabling Islamabad to gain increased access to the international capital markets. In addition, the maturity period for external borrowing has been extended for Pakistan because there is already $6 billion worth of investor interest.
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