Global investors have signaled renewed confidence in Pakistan’s economy as three of its Eurobonds are now trading at a premium for the first time in recent memory, crossing the $1 mark per unit in international capital markets.
Arif Habib Limited’s Head of Research, Sana Tawfik, confirmed that the Eurobonds maturing in September 2025 and April 2026 closed at 100.28 cents and 100.05 cents respectively, while a third bond set to mature in January 2029 was trading at 100.74 cents by Wednesday’s close. In total, six Pakistani Eurobonds are listed in global markets, with a combined issuance size of $6.8 billion and maturities stretching between September 2025 and April 2051.
State Bank of Pakistan (SBP) Governor Jameel Ahmad, speaking at the monetary policy press conference on Wednesday, said: “This is the first time in several years that three of Pakistan’s Eurobonds are trading at a premium.” He recalled that as recently as 2023, these instruments were being traded at deep discounts of 37–38 cents on the dollar, or about one-third of their original price.
The sharp recovery in bond pricing follows a series of positive economic developments. Governor Ahmad attributed the market turnaround to timely repayment of external debt, consistent interest payments, and a significant rise in foreign exchange reserves, which grew to $14.5 billion in FY25, up from $9.4 billion the previous year.
Investor optimism has also been buoyed by recent credit rating upgrades, with two international agencies lifting Pakistan’s sovereign rating to ‘B-’ from ‘CCC+’, accompanied by a stable outlook. The rupee-dollar exchange rate has also stabilized, while workers’ remittances surged to a record high of $38.3 billion in FY25, compared to $32.3 billion in FY24.
Despite constrained fiscal space, Pakistan successfully repaid $1 billion on a 10-year Eurobond that matured earlier, defying concerns about foreign exchange availability. Ahmad noted that during the ongoing FY2025-26, Pakistan is scheduled to repay $1.8 billion on two maturing Eurobonds. This could pave the way for fresh debt issuance through global capital markets, leveraging the improved market sentiment.
Looking ahead, Pakistan’s total external debt repayments for FY26 are projected at $25.9 billion, including $16 billion in expected rollovers. The net repayment burden stands at $10 billion, comprising $3.75 billion in commercial loan repayments and $4 billion in interest payments.
Interestingly, the country’s total foreign debt stock has remained stable at approximately $100 billion for the past three years, suggesting that fresh borrowing has been largely used to service existing obligations. By contrast, over the previous seven-year period, external debt had been increasing by an average of $6 billion annually.
Meanwhile, the SBP on Wednesday kept the policy rate unchanged at 11%, underscoring a wait-and-see approach amid recovering macroeconomic indicators.
