Pakistan increases Eurobond from $500m to $750m

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A teller at a government office calculates US banknotes. — Reuters/File
A teller at a government office calculates US banknotes. — Reuters/File

ISLAMABAD: The government announced on Monday that it has increased its Eurobond to $750 million from $500m by exercising the green-shoe option as the country’s foreign exchange needs grow due to a higher oil import bill amid the war in the Middle East.

A green-shoe option is the over-allotment provision allowing the borrower to raise additional funds at the same rate if the public demand exceeds expectations.

“Following its successful return to international capital markets after four years, Pakistan has upsized its Eurobond issuance to $750m, with an additional $250m placed with global institutional investors through the exercise of the green shoe option,” the Ministry of Finance said in a statement.

Khurram Schehzad, the adviser to the finance minister, said on the social media platform X that the development reflected “stronger-than-expected investor demand, reinforcing confidence in Pakistan’s economic outlook and market re-entry”.

He said that the three-year Eurobond, which was initially placed at $500m, attracted significant global interest, enabling the government to broaden investor participation.

He added that the development reflected “strong investor demand and sustained appetite”, “enhanced depth and liquidity” in Pakistan’s sovereign yield curve and reinforced Pakistan’s “re-engagement with global capital markets”.

“Driven by incremental investor demand, the upsizing enhances Pakistan’s presence in global capital markets — reinforcing confidence in the country’s economic outlook and market re-entry, while building momentum for future issuances under the Global Medium-Term Note (GMTN) programme,” he said.

Last week, the government announced that it had raised $500m in the international capital market through a Eurobond, marking the first such issuance in four years.

Finance Minister Muhammad Aurangzeb had described the development as the culmination of a four-year journey and signalled that Pakistan’s economy was going in the right direction. He further stressed that it was a “huge vote of confidence” in Pakistan’s leadership and the country’s economic direction. Informed sources said that the Eurobond offered a 6.975 per cent interest rate, maturing in April 2029.

The announcement came a day after Saudi Arabia said it was extending its support facility for Pakistan to $8bn from $5bn, with the first additional disbursement of $2bn.

On Saturday, Pakistan returned $2bn to the United Arab Emirates, which had sought the return of $3.5bn in funds part of external financing support extended in 2019 to help stabilise Pakistan’s balance of payments.

Earlier this month, Pakistan had also repaid $1.43bn in external debt, including a $1.3 billion Eurobond maturing on April 8.

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