Pakistan launches dual-tranche dollar Eurobond offering

Pakistan has launched the process for a benchmark US dollar-denominated dual-tranche Eurobond offering with five-year and 10-year maturities, marking another step in the country's efforts to re-establish a stronger presence in international capital markets.

 

Adviser to the Finance Minister Khurram Schehzad said the proposed transaction remained subject to market conditions and represented continued progress in Pakistan's renewed engagement with global investors.

 

The final size, pricing and yields of the proposed bonds have yet to be determined and will depend on investor demand and prevailing market conditions.

 

According to Schehzad, the planned issuance follows recent improvements in Pakistan's macroeconomic indicators and sovereign credit profile, supporting the government's efforts to broaden access to international financing.

 

The development comes less than five months after Pakistan returned to international bond markets following a four-year hiatus.

 

In April, Pakistan initially raised $500 million through a three-year Eurobond issued under its Global Medium-Term Note (GMTN) Programme at a coupon rate of 6.975%. Strong investor demand subsequently allowed the government to exercise a $250 million green-shoe option, increasing the total issuance to $750 million. The bond is scheduled to mature in April 2029.

 

Pakistan also repaid a $1.4 billion Eurobond that matured in April, a move that helped the country re-establish a benchmark for pricing its sovereign debt in international markets after several years of depending primarily on multilateral, bilateral and commercial sources of financing.

 

Meanwhile, S&P assigned a 'B' rating to Pakistan's GMTN programme and the proposed benchmark US dollar notes, in line with the country's sovereign credit rating.

 

Fitch Ratings has also assigned a 'B-' rating, along with a Recovery Rating of 'RR4', to the GMTN programme and related proposed issuance, consistent with Pakistan's long-term sovereign rating.

 

Unlike the three-year maturity offered in April, the proposed transaction includes five- and 10-year tranches, extending Pakistan's debt maturity profile and providing an important test of international investors' willingness to hold Pakistani sovereign debt over longer periods.

 

The success and pricing of the offering will be closely watched as an indicator of investor confidence in Pakistan's improving economic outlook and its return to global capital markets.