Pakistan’s dollar bonds drop amid cross-border tensions

Pakistan’s sovereign dollar bonds declined on Friday, with the 2051 maturity falling by just over 2 cents to 98.76 cents, its lowest level in a month, Reuters reported, quoting Tradeweb data.

The drop followed overnight strikes by Pakistan on targets in Afghanistan’s major cities, marking a significant escalation in cross-border tensions.

Analysts said the timing of the developments coincides with ongoing talks between Pakistan and the International Monetary Fund (IMF) over the third programme review, which is expected to unlock the next tranche of funding.

An emerging markets economist at Oxford Economics said heightened geopolitical risks could add pressure to Pakistan’s fiscal and external accounts, particularly as negotiations with the IMF are underway.

Other regional sovereign bonds also faced selling pressure. Egypt’s bonds fell by around 1 cent to their lowest level in a month, while Jordan’s 2047 maturity declined by roughly 1 cent.

Broader regional tensions remain elevated as negotiations between the United States and Iran ended without a breakthrough, while US President Donald Trump ordered a military build-up in the Middle East.