Pakistan’s sovereign dollar bonds experienced a decline of up to 1.25 cents on Monday, amid inconclusive polls and political uncertainty.
According to the Tradeweb data, all bonds witnessed a drop, with the April 2024 bond suffering the most, trading at 95.88 cents to the dollar.
The two political parties, PMLN and PPP are scheduled to convene on Monday in a bid to resolve their differences and facilitate the formation of a coalition government.
The ongoing political uncertainty has the potential to further destabilise the economy, necessitating decisive action from Pakistan’s leaders to navigate the country out of its economic troubles.
Just a few days back, Bloomberg reported that the South Asian nation’s dollar bonds delivered some of the best returns in emerging markets last year, gaining over 90%.
They carried much of that momentum through January as the IMF made its final disbursal under a program that also facilitated bilateral finance from friendly countries, bringing Pakistan back from the brink of default.
Additionally, Bloomberg quoted Goldman Sachs saying that Pakistan’s dollar bonds will rebound, overcoming a fractured election mandate, as the leaders of the emerging coalition understand the gravity of the economic crisis and will work together to secure IMF aid.
On the flip side, Fitch Ratings said that the close outcome of Pakistan’s election and resulting near-term political uncertainty may complicate the country’s efforts to secure a financing agreement with the IMF.
