KARACHI, Aug 11: Pakistan has invested its swelling foreign exchange reserves in the commercial market for the first time, choosing an Islamic Development Bank five-year bond for its debut, bank officials said on Monday.

“The State Bank has invested $25 million in the IDB bond,” Zafar M. Shaikh, head of treasury at the central bank, told Reuters. “The settlement day for the $400 million bond is August 12.”

It is the first time the central bank is investing a portion of the country’s foreign exchange reserves in the commercial market, reflecting growing confidence in the size of the reserves and the stability of the economy. Foreign exchange reserves stand at $11.06 billion.

Citigroup acted as lead adviser, sole book runner and lead manager for the transaction, while a subsidiary, Citi Islamic Investment Bank, structured the bond. Abu Dhabi Islamic Bank and Kuwait Finance House have acted as the co-lead managers.

The bond has been approved by the Shariat Board of the Islamic Development Bank, Mr Shaikh said.

The yield on the bond is expected to be around 16 basis points above five-year swaps, a senior official at the Citi Islamic Investment Bank, said by telephone from Dubai.—Reuters