ISLAMABAD: Pakistan’s T-Bills continued to attract significant foreign investment in July, with foreign investors injecting a total of $174.75 million in the first 26 days of the month, according to data from the State Bank of Pakistan (SBP).
This marks the second consecutive month of strong interest in Pakistani T-Bills, with foreign investors having parked a significant $194.27 million in T-Bills through Special Convertible Rupee Accounts (SCRA) in June.
The bonds offer attractive returns of around 19.49% for three-month, 19.29% for six-month, and 18.24% for 12-month papers, payable in Pakistani rupees (PKR). The country’s growing confidence amidst improved economic conditions and a stable exchange rate has likely contributed to the strong interest in T-Bills.
In the last fiscal year, Pakistan witnessed a notable net inflow of $580.85 million in T-Bills through SCRA. This trend is expected to continue, given the recent upgrade of Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) by global rating agency Fitch to ‘CCC+’ from ‘CCC’.
The upgrade reflects greater certainty over the continued availability of external funding, following Pakistan’s staff-level agreement with the International Monetary Fund (IMF) on a new 37-month $7 billion Extended Fund Facility (EFF). The rating agency noted that strong performance on the previous IMF arrangement helped the country narrow fiscal deficits and rebuild foreign exchange reserves, and further improvements are likely.
SCRA allows foreign persons, institutions, and non-resident Pakistanis to invest in various instruments such as equities, government bonds, and TFCs. Under this scheme, funds are converted into Pakistani rupees and credited to the depositor’s “Special Convertible Rupee” account.
