March 23, 2006	Thursday	Safar 22, 1427

HONG KONG, March 22: A bond issue of up to $1.25 billion from Pakistan has attracted $1.3 billion of subscriptions so far, a market source said on Wednesday.

The sovereign bond offer will comprise 10-year and 30-year tranches, with pricing expected on Thursday. Pakistan has set an indicative yield range of 7.75 to 7.875 per cent for the 30-year tranche, with the yield guidance for the 10-year deal set at 7.125 per cent, sources said.

A Hong Kong-based fund manager said the 62.5 to 75 basis point differential between the 10-year and 30-year tranches offered by Pakistan was wider than other emerging market debt.

“The 30-year looks cheaper but I don’t know whether it will perform better than the 10-year,” he said.

But John Stuermer, managing director and head of global high yield research at Bear Stearns, said the pricing was thin compared with Indonesia, which has a better fiscal balance and a steadier political situation.

“The political environment in Indonesia is much calmer in light of the presidential and parliamentary elections in 2004,” he said.

“It’s the frontline state on the war on terrorism and that combined with President Musharraf’s political legitimacy raises the question of political stability in Pakistan.”

Stuermer, however, said the country benefited from a robust private sector and the strong leadership of Prime Minister Shaukat Aziz and the bureaucracy.

By comparison, B2/B-plus-rated Indonesia’s 2016 bonds were quoted on Wednesday at 6.946/6.877 per cent, while the 2035 bonds were at 7.466/7.409 per cent.

Investor presentations will wrap up in New York and Los Angeles later on Wednesday after stopping in Singapore, Hong Kong, London and Boston earlier this week.

Citigroup, Deutsche Bank and JP Morgan are joint book-runners for the proposed transaction, which is rated B-plus by Standard & Poor’s. It will be Pakistan’s third foray into the international debt market since February 2004.

Pakistan, which had been under economic sanctions after conducting nuclear tests in mid-1998, returned to the global debt market early in 2004 with a $500 million, five-year eurobond. In January 2005, it sold a $600 million Islamic bond.—Reuters