The Ministry of Finance successfully raised over Rs1.2 trillion in a major government bond auction, which included the launch of Pakistan’s first-ever 15-year Zero Coupon Bond. The bond attracted strong investor interest and generated over Rs47 billion.
Unlike traditional bonds, the Zero Coupon Bond does not pay annual interest. Instead, investors will receive a lump sum payment at the end of the 15-year period, allowing the government to reduce short-term repayment pressures and better manage its finances.
The auction’s success reflects growing investor confidence in Pakistan’s economic outlook and ongoing reforms. This bond issuance is part of the government’s broader strategy to manage public debt more effectively, extend debt repayment periods, and promote long-term and Islamic financial products.
In addition to the new Zero Coupon Bond, yields on other government bonds also fell, suggesting market optimism over potential declines in inflation and interest rates.
The government’s strategy to stabilise debt is evident, with the average repayment period of domestic debt increasing from 2.7 years last year to 3.75 years, reducing the urgency of short-term loan repayments.
Finance Minister Senator Muhammad Aurangzeb stated, “This is a major step forward in strengthening Pakistan’s financial system. By introducing new borrowing methods, we are reducing risk while offering more investment options. Our goal is to manage public debt responsibly, promote Islamic finance, and attract long-term investments to support economic growth.”
The Finance Ministry is also developing additional products to encourage broader public participation in government bonds, particularly Islamic ones, in an effort to foster financial inclusion and savings. Despite global uncertainties, the success of this auction signals that investor confidence in Pakistan’s economy is on the rise.
