Govt receives bids from foreign banks to structure sovereign bonds

ISLAMABAD: Top global banks have placed bids for getting a contract to structure Pakistan’s upcoming sovereign bonds that the government wants to issue to raise a couple of billion dollars ahead of a bullet repayment of $1 billion next month.

The government has received a very encouraging response as top European, American and Chinese banks have submitted technical and financial bids for the contract of financial advisers to float sovereign bonds, Ministry of Finance officials were quoted as saying in The Express Tribune.

The ministry received ten bids from prospective financial advisers and two consortiums will be hired to put in place structures for floating Eurobond and Sukuk bonds during the next year, claimed the report.

In response to an ad placed by the Ministry of Finance, ten bidders submitted technical and financial offers. These include JP Morgan, Citibank, Deutsche Bank, Standard Chartered Bank, and Credit Suisse.

The Bank of China, Industrial and Commercial Bank of China and CLSA Capital Markets Limited have submitted their technical and financial bids. From the Gulf, the Dubai Islamic Bank and Emirates NBD are the bidders.

The ministry would technically evaluate the bids this week and after that their financial bids will be opened. The other bidders may be asked to match the price of the lowest bidder to form a consortium.

According to the report, the country is expected to raise at least $1 billion to $2 billion through the upcoming Eurobond and Sukuk offers. However, the officials believe that the actual size will depend on the government’s external financing needs.

Pakistan needs these funds to maintain its official foreign currency reserves at current minimum levels ahead of the $1 billion repayments. In November 2014, the then PML-N government had borrowed $1 billion through Sukuk bond at a profit rate of 5.625%.

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