KARACHI: JazzWorld, an integrated digital services company, has executed Pakistan’s largest-ever interest rate swap (IRS) transaction of Rs75 billion with United Bank Ltd (UBL).
An interest rate swap is a financial contract under which two parties exchange interest payment obligations, typically swapping a fixed interest rate for a floating rate for a predetermined amount over a specified period. Such instruments allow borrowers to better manage interest rate risk or secure more favourable financing terms.
Jazz’s Chief Financial Officer Farrukh Khan said that in Pakistan, most corporate loans are on variable rates, which adjust every three to six months. “For our growth, we borrow long term, but until now, we had no certainty over future interest costs,” he said.
In Pakistan, most corporate loans are extended on a variable-rate basis, with interest rates rising or falling every three to six months, depending on the facility. For growth, Jazz typically borrows long-term, often for up to 10 years, but without certainty over whether future interest costs will be higher or lower, which creates significant uncertainty, particularly in the local volatile operating environment, he explained.
The IRS covers about Rs35bn for five years and the balance for seven years, representing roughly 28-29 per cent of Jazz’s total debt. “While the majority of our debt remains variable, this transaction reduces uncertainty in financing costs and cash flows, allowing us to focus on revenue growth and business development,” Mr Khan added.
Jazz is among the largest borrowers in the country, Mr Khan said, adding that with upcoming spectrum auctions on the horizon, the company expects its borrowing requirements to increase further.
According to a note by Arif Habib Limited (AHL), the benchmark Karachi Interbank Offered Rate (Kibor) on the prevailing floating-rate loan was last reset in November 2025, with the total borrowing cost estimated at 11.5-12.0pc, based on the six-month Kibor plus 60 basis points. By fixing the rate through the swap, Jazz secures greater cost predictability and insulates itself against the risk of future interest rate increases.
Praising Pakistan’s progress in its digital and financial systems, Borak Ozer, Chief Financial Officer of Jazz’s parent company Veon, said it would like to replicate its success in other countries. “From a revenue perspective, Pakistan is our flagship entity, and we would like to copy-paste the model here to Bangladesh,” he said.
Published in Dawn, January 20th, 2026
