04 February 2005	Friday	24 Zilhaj 1425

ISLAMABAD, Feb 3: Under President Musharraf and Prime Minister Shaukat Aziz, Pakistan has achieved remarkable turnaround in its economic and fiscal situation.

This was reported by Adam Harper of the Asian Review of the year who interviewed Dr Ashfaq Hassan Khan, Director General Pakistan's Debt Office and Economic Adviser to the Finance Ministry.

The report is headlined "Islamic republic looks forward to Sukuk Bond and Pakistan's reputation gains momentum". Pakistan has achieved a remarkable turnaround in its economic and fiscal situation - a turnaround that enable it to sell one of the Asian market's outstanding sovereign bonds in February, its first offshore deal for seven years, the Asian Review of the year said.

It added that Pakistan was also preparing a debt global Sukuk, which looked set to enjoy an equally enthusiastic reception from international investors. Citigroup and HSBC have the mandate.

Apart from being experienced arrangers of Islamic issues, they are present in Pakistan - a must if a bank wants to arrange a deal for the country. Investors' belief in the continuity of this process was enough to generate an order book of more than $2bn for Pakistan's $500m five-year Eurobond launched in February.

That bond was criticized for having an aggressive spread of 370bp over US Treasuries when it was launched, but has tightened to 260bp-264bp in the secondary market.

As Mr Khan worked ahead of launching the sovereign's $300m-$500m five-year floating rate Sukuk - a bond complaint with the Islamic principles of Shariah law - he considers where Pakistan will be in five years time.

The Asian Review said the February Eurobond was used to refinance expensive multilateral debt. Mr Khan will not say exactly what the proceeds of the Sukuk will be used for, but notes that "repayment of expensive loans is one element of our debt reduction strategy," it added.

It said that Mr Khan is open to the idea of issuing in other currencies, perhaps euros. "It's a good idea to diversify currencies, but we have not yet take any decision in this respect," he says.

"We have not been shown a proposal for a deal in euros," he adds, somewhat surprisingly, given the currency's recent vogue in Asia. It added that Pakistan demonstrated the true level of international demand for its Eurobond by not initially selling it to onshore investors.

Mr Khan admits Pakistan's Sukuk will have a natural following in the Middle East, but stresses it will not be targeted exclusively at Middle Eastern investors, and will road show in Europe and elsewhere in Asia as well.

Mr Khan expects that Pakistan will not be a stranger to the offshore market in the years to come. "I would not use the word frequent, but I would certainly say, I expect us to be in the markets almost every year we want to maintain our relationship with the international capital markets and we will be working towards extending our yield curve," Khan told the Asian Review.-APP