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Pakistan’s best international bond float raises $2.5 billion
December 02, 2017
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ISLAMABAD: In the largest-ever transaction of its kind for the country, Pakistan has raised $2.5 billion from global capital markets by issuing the five-year Sukuk (Islamic bond) and the 10-year Eurobond at relatively lower rates, suggesting that foreign investors are still confident about the country’s $300 billion economy.

The dollar-denominated Eurobond and Sukuk Al-Ijarah fetched the highest-ever amount for Pakistan in a single such attempt abroad, official sources said here Thursday about teh performance a day earlier.

Surprisingly, Pakistan got a better price and a better deal size despite difficult domestic situation.

The $2.5 billion injection would provide a breathing space to the government which is reluctant to go back to the International Monetary Fund (IMF) ahead of the next general elections.

The excessive liquidity in the international market and low-interest environment also helped the government strike a better deal.

Pakistan got around $8 billion offers for both Sukuk and Eurobond, allowing the country to get the best deal.

The outcome of the deal beat expectations of both the government and market analysts, as there were fears that investors might strike a higher price because of the prevailing political uncertainty and the country’s huge financing needs.

The deal was signed off at rates which were even lower than indicative rates Pakistan offered to global investors. Pakistan offered the 10-year Eurobond bond in the low 7 per cent range and the 5-year Sukuk at an initial price tag of 6 per cent.

The government raised $1 billion through the 5-year Sukuk at the rate of 5.625 per cent, which near lowest-ever rate of 5.5 per cent that Pakistan paid in September last year.

The rest of $1.5 billion were generated through the 10-year Eurobond at a fixed rate of 6.875 per cent, which is 455 basis points above the corresponding 10-year US Treasury benchmark rate, matching the lowest-ever rate of 6.875 per cent that Pakistan paid in 2007 on its 10-year Eurobond.

The government shelved its plan to issue a 30-year Eurobond after a gap of 12 years, encountering difficulties at fetching a better price.

Internews

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