Pakistan raises $3bn through dual-tranche Eurobond sale

ISLAMABAD: Pakistan has raised a record $3 billion — its single largest international capital market transaction — through a dual-tranche Eurobond sale that drew nearly $6bn in orders, the Ministry of Finance said on Thursday.

In a statement, it said: “The transaction attracted nearly $6bn 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 ministry added.

The transaction includes $1.75bn through a 5.5-year bond at a coupon rate of 7.5 per cent and $1.25bn through a 10-year bond at 7.9pc, the ministry said.

Pakistan’s last most expensive Eurobond was raised more than a decade ago at an 8.25pc interest rate during the tenure of the PML-N government. It reached maturity a couple of years ago and has already been repaid.

The finance ministry said on Thursday that the total global demand for Pakistani paper amounted to $6bn.

“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,” it said. However, the significance of this transaction goes well beyond the amount raised, it added.

“The transaction also represents an important milestone in Pakistan’s broader road to market strategy,” the ministry said.

It said that after the successful inaugural Panda Bond and improvements in Pakistan’s sovereign credit profile, this was the first issuance under the country’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,” the ministry said.

“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: Borrow better. Extend maturities. Diversify funding. Reduce refinancing risk. Improve the sovereign debt profile. This is the difference between simply borrowing and actively managing the sovereign balance sheet,” it added.

It said that over the past three years, Pakistan’s improving economic trajectory had increasingly been recognised through successive sovereign credit-rating upgrades and renewed access to international capital markets.

“Now, global investors have reinforced that assessment with billions of dollars of actual capital,” it said.

“The depth of the order book, its geographically diversified institutional investor base, and substantial demand for a 10-year Pakistan sovereign instrument together provide a powerful market-based signal of renewed confidence in Pakistan’s medium and long-term trajectory,” the ministry said.

“Three years of rebuilding credibility; nearly $6bn of global investor demand, and a record $3bn issued in a single transaction — it is a landmark moment in Pakistan’s journey from economic stabilisation towards sustainable growth — and a stronger platform for the road ahead,” it concluded.

In April, the government initially raised $500 million through a three-year Eurobond under its GMTN Programme at a coupon of 6.975pc. The issue was subsequently increased to $750m through a $250m green-shoe option after stronger-than-expected investor demand. The bond matures in April 2029.

Pakistan has also repaid a $1.4 billion Eurobond that matured in April, allowing the government to re-establish a pricing benchmark in international debt markets after several years of relying heavily on multilateral, bilateral and commercial financing.

The latest offering extends the maturity profile beyond the three-year tenor used in April, with the proposed five and 10-year tranches providing a test of investors’ willingness to hold Pakistani sovereign debt for longer periods.