Pakistan plans $750mn eurobond issue to boost forex reserves

Published October 31, 2013
File photo shows Pakistani Finance Minister Ishaq Dar.
File photo shows Pakistani Finance Minister Ishaq Dar.

KARACHI: Pakistan is planning its first eurobond issue for six years and aims to raise $750 million to boost dwindling foreign exchange reserves and shore up the rupee, officials said.

The finance ministry has approached several international banks seeking advice and with a view to appointing one as lead adviser for the launch, a ministry official told news agency AFP.

The move comes with an International Monetary Fund (IMF) team in Pakistan to check progress on reforms tied to a $6.7 billion loan package.

Islamabad has approached Citibank, HSBC and International China Banking Corporation for advice on the bond issue, the ministry official said.

“The banks have been contacted and the final decision will be taken after they come out with their take on the launch,” the official said. “They would advise Islamabad when to launch the bonds, what should be the selling price and volume to the offered.”

Another ministry official confirmed the details. Both spoke on condition of anonymity.

Pakistan raised $750 million and $500 million in its last bond issues in 2007, which were offered with a 7.75 per cent markup and a 10-year term.

The IMF paid the $540 million first installment of the three-year loan deal in September, but future payments depend on the completion of tough economic reforms measured at quarterly reviews.

Pakistan's foreign exchange reserves have fallen alarmingly this year to just $4.2 billion – $300 million below the target set by the IMF for the end of September.

To add to the economic woes, the rupee has also shed 6.2 per cent of its value against the dollar since January.

Pakistan has bumped along at three per cent GDP growth in recent years, less than half the figure experts say is needed to absorb the growing young population into the workforce.

Nevertheless, in August ratings agency Standard and Poor’s gave Pakistan B- status with a stable outlook. Mohammad Sohail, chief executive officer of Topline Securities, said it was a good time for a bond issue, with the IMF deal bedding in, and Pakistan’s other options for raising capital were limited.

“IMF has already granted a loan to Pakistan that also supports the credibility of the country among the world capital markets,” he told AFP.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Half victories
Updated 01 Dec, 2023

Half victories

Nawaz Sharif cannot be considered irrational for lacking faith in the judicial process.
AIDS alarm
01 Dec, 2023

AIDS alarm

AS countries observe World AIDS Day today, it is a moment of reflection for Pakistan, which is grappling with an...
Turbat protest
01 Dec, 2023

Turbat protest

ONCE again, people in Balochistan are out on the streets against the alleged excesses of the state. The trigger of...
Political sacrifice
Updated 30 Nov, 2023

Political sacrifice

Imran deserves praise for displaying political maturity in handling party's chairmanship transition.
‘Quick-fix’ nation
30 Nov, 2023

‘Quick-fix’ nation

THE impulse for policy prescriptions that will quickly ‘fix’ the rotten economy, create tens of hundreds of jobs...
Narcotics menace
30 Nov, 2023

Narcotics menace

WE are watching a tragedy unfold — the curse of substance abuse and addiction hits every fourth household in...