Pakistan eyes Eurobond issuance in FY26 as credit rating upgrade nears

Finance Minister Muhammad Aurangzeb announced that Pakistan is preparing to issue Eurobonds to secure foreign financing in fiscal year 2025-26, contingent on an expected upgrade of the country’s credit rating to category ‘B’ by global rating agencies. 

Speaking at the launch of the Securities and Exchange Commission of Pakistan’s (SECP) ‘Electronic Mortgage Register’, Aurangzeb revealed that Pakistan is pursuing $1 billion in climate financing from the International Monetary Fund (IMF) and actively engaging with the World Bank (WB), Asian Development Bank (ADB), and Asian Infrastructure Investment Bank (AIIB) for additional climate funds. 

He also mentioned the potential launch of a panda bond in the near term to tap Chinese capital markets.

Earlier, the government aimed to raise $2 billion through Eurobonds in FY24-25 and an additional $300-500 million from a panda bond. 

Aurangzeb clarified, however, that the Eurobond issuance would likely occur in FY26 rather than the current fiscal year.

“We’ll access international markets once our rating reaches single ‘B,’ but we might launch a panda bond beforehand,” Aurangzeb said. 

He confirmed that discussions with credit rating agencies, including S&P, Fitch, and Moody’s, have been ongoing and are expected to yield an upgrade in the next few months following a preliminary improvement in July-August 2024.

The minister also detailed Pakistan’s recent discussions with the IMF regarding climate financing, with an IMF delegation scheduled to visit Pakistan next month. Additionally, Pakistan has held productive climate financing talks with the AIIB, with Aurangzeb emphasizing the need for Pakistan to clearly outline climate project details to unlock funding.