Pakistan has raised $3 billion through a new Eurobond deal, the country’s largest-ever international bond transaction in a single issuance, the Ministry of Finance said.
The deal received strong interest from international investors. Investors placed orders worth nearly $6 billion, which is almost twice the amount Pakistan planned to raise.
Pakistan issued the money through two bonds. The first was a 5.5-year bond worth $1.75 billion with an interest rate of 7.50 percent. The second was a 10-year bond worth $1.25 billion with an interest rate of 7.90 percent.
The strong demand for the 10-year bond shows that international investors are willing to invest in Pakistan for a longer period.
The new bond sale is also Pakistan’s first issuance under its renewed Global Medium Term Note program. The program will help Pakistan access international markets and reduce its dependence on a small number of financing sources.
The government said the move is not only about raising money. It also aims to improve the country’s debt management. Pakistan wants to use different sources of financing, increase the average time of its debt and reduce the risk of having to repay or refinance large amounts of debt in a short period.
The government also plans to use longer-term financing to replace some short-term or more expensive debt when it makes financial sense.
The Ministry of Finance said its Debt Management Office played an important role in completing the transaction. Citi, Deutsche Bank, Emirates NBD, MUFG and Standard Chartered worked as joint bookrunners on the deal.
The government said recent improvements in Pakistan’s credit ratings and its return to international capital markets show growing investor confidence.
However, the new $3 billion deal does not solve all of Pakistan’s economic problems. The country will still need to focus on fiscal discipline, economic reforms, exports, investment and productivity to maintain investor confidence and improve its debt situation.
