ISLAMABAD: Pakistan has raised $3 billion Eurobond through dual tranche transactions for five year and ten-year tenor at the rate of 7.5 percent and 7.9 percent respectively.
The Ministry of Finance high-ups said that it was not a placement of an international bond, but the country conducted online roadshows that generated a lot of interest among potential investors across the globe, including from the USA, Europe, the Gulf and others. The Joint Lead Managers (JLM) advised Pakistan’s economic managers to kick off bookings that touched $6.1 billion mainly through Pension Funds, Mutual Funds and others.
The country received $3.3 billion in bookings for a five-year tenor at the rate of 7.75 percent and $2.7 billion for 10 years at the rate of 8.25 percent. However, the country accepted a transaction of $1.75 billion for a 5½-year Eurobond with a coupon of 7.5 percent and $1.25 billion for 10 years at the rate of 7.9 percent.
When asked why there were no physical roadshows arranged as being planned, the official said that they conducted online roadshows attracting investors from different parts of the world, including the US, Europe, the Gulf and others.
Minister for Finance Muhammad Aurangzeb had hinted in the recent past that Islamabad would increase its reliance on raising foreign funding from international bonds and capital markets in order to pay back bilateral debt. “There will be choice of the government to utilise the raised amount for paying off its bilateral debt, but so far no formal decision has been taken yet,” said one top official of the Finance Ministry.
According to an official statement issued by the Ministry of Finance on Thursday, Pakistan has successfully issued $3 billion through a landmark dual-tranche Eurobond transaction, the largest-ever international bond issuance by Pakistan in a single transaction.
The transaction attracted nearly $6 billion in orders — almost twice the amount issued — from a broad and diversified base of institutional investors across global markets and continents.
The successful transaction marks a major milestone in Pakistan’s renewed and increasingly diversified access to international capital markets, demonstrating strong investor confidence and Pakistan’s ability to access global funding markets at significant scale. The Transaction — US$1.75 billion — 5½-year Eurobond - Coupon: 7.50 percent - US$1.25 billion — 10-year Eurobond - Coupon: 7.90 percent — Total Issued: US$3.0 billion - Global Demand: Nearly US$6.0 billion.
The competitive pricing across both maturities, together with strong demand extending to the 10-year tenor, demonstrates Pakistan’s ability to mobilise sizeable longer-term financing as international investors reassess the country’s improving macroeconomic and credit fundamentals. However, the significance of this transaction goes well beyond the amount raised. The transaction also represents an important milestone in Pakistan’s broader Road to Market strategy.
Following the successful inaugural Panda Bond and improvements in Pakistan’s sovereign credit profile, this is the first issuance under Pakistan’s renewed strategic Global Medium-Term Note (GMTN) Programme — creating a platform for diversified access to international capital markets. The objective is not simply to raise additional debt. Pakistan is pursuing a broader strategy of active sovereign liability management — diversifying financing sources, extending maturities, reducing refinancing and rollover risks and creating opportunities to replace shorter-term and more expensive obligations with longer-duration, competitively priced financing where economically beneficial.
Pakistan has already pursued substantial early retirement of domestic debt ahead of maturity. Extending that discipline to external financing is part of the same objective.
In his address at the ADB-organised “Dialogue on Tax and Fiscal Sustainability in Pakistan” here on Thursday, Minister for Finance Muhammad Aurangzeb said, “Let me start with a positive development that happened overnight where Pakistan as a sovereign printed $3 billion bond. It’s a dual tranche. It’s the single largest transaction in the history of Pakistan. It reflects external validation received from the rating agencies. The size of the order book was twice what we decided for printing.”
He said: “It reflects diversified nature of investors from Asia, Middle East, Europe and USA that shows renewed confidence of international investor base on the economy of Pakistan for the economy where it was moving. The pricing was also pleasing factor on the dual tranches of the bond for 5.5 and 10 years tenor.” This is very much part of GMTN strategy and the Eurobond was the first transaction and now looking at Sukuks and rupee denominated dollar settled and Panda bond. This all will be repaying short term expensive debt, extended maturities and reducing global risks is part of deliberate strategy, he said.
