Govt considering raising another $500 million to $1 billion via Eurobond

LAHORE: Merely months after raising $2.5 billion in end-November via Eurobond and Sukuk issue in international markets, the government is considering floating another $500 million to $1 billion bond, depending on the price.

The government won’t hold any roadshows to raise these funds and pricing is expected to be impacted by Fitch’s rating downgrade in late-January. Fitch’s had revised Pakistan’s outlook from stable ‘B’ rating to negative affirms at ‘B’.

The government will finalize the plan for the bond issue on 7th of February and this is the third such bond issue during the current administrations tenure, reported a foreign publication.

During a meeting held on 29th January between high ranking Ministry of Finance officials it was discussed that consortium of banks led by four banks, Industrial and Commercial Bank of China, Standard Chartered Bank, Citi Bank and Deutsche Bank will be leading this issue.

As per initial reports, the government is aiming to raise $1 billion at 6.875 percent for a tenure of ten years and final approval remains to be given by Ministry of Finance.

Target price for above mentioned issue is at 6.875 percent, as the government is willing to accept less amount than to undermine the price of the issue. Also, it has come to the fore the MoF has shown willingness to accept $500 million but is unwilling to undermine the price of the issue.

In end-November last year, Pakistan raised $2.5 billion debt via the issuance of dollar-denominated debt as it sought to shore-up its dwindling foreign exchange reserves.

$1 billion of a 5-year sukuk was issued at 5.635 per-cent and $1.5 billion of 10-year notes were issued at 6.875 per-cent respectively. The country’s foreign exchange reserves fell by 25pc till September 30th touching $13.3 billion.

Worrying macro-economic indicators followed by widening current and trade deficits which touched $14.4 billion by end of September 2017 had left the government in a quandary.

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