Pakistan bonds slump

Published September 30, 2022

KARACHI: Dollar-denominated bonds of Pakistan continued their southward movement on Thursday as fears of global investors about a managed currency under Finance Minister Ishaq Dar refused to subside.

The 10-year Pakistan Government International Bond, which is to mature in April 2024, declined to 41.3 cents from 41.7 cents a day ago. In simpler words, it means the debt instrument is trading at only 41.3 per cent of its face value.

As a consequence, the bond’s yield-to-maturity — which is inversely proportional to its price in the secondary market — rose to 82.2pc from 80.8pc a day ago.

Prices of eight of the nine Pakistani bonds – both conventional and Islamic – took a dip on Thursday. Only Pakistan Global Sukuk Programme, due for repayment in January 2029, rose to 71 cents from 67.6 cents the preceding day.

Besides a hawkish stance on the exchange rate management by Mr Dar, recent floods that drove 33 million Pakistanis out of their homes are also responsible for the drubbing that Pakistani bonds have been receiving in the international market.

The growth rate of the national economy in the current fiscal year is expected to go down to 2pc from the target of 5pc.

Published in Dawn, September 30th, 2022

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