Pakistan's dollar bonds slide to lowest in month as economy reels with historic floods: report

• Bloomberg reports bonds due in 2031 were quoted at 50.82 cents on the dollar — lowest since August 2.
• Bonds due 2024 fell to 66.6 cents on the dollar — the lowest since August 5.
• Analyst saysPakistan bonds are weighed down by ongoing catastrophic floods in the country.

As Pakistan’s economy reels from cataclysmic floods, the coalition government’s fiscal health has come under pressure. As a result, the country’s dollar bonds have slid to the lowest level in more than a month, Bloomberg reported Tuesday.

The publication reported that the bonds due in 2031 were quoted 0.6 cents lower at 50.82 cents on the dollar on Tuesday — the lowest since August 2.

After the cash-strapped nation secured $1.1 billion from the International Monetary Fund (IMF) in August — which helped ease the risk of default — the notes surged to 58 cents on the dollar.

Meanwhile, the bonds due 2024 fell to 66.6 cents on the dollar — the lowest since August 5.

“Pakistan bonds are weighed down by the ongoing catastrophic floods in the country,” said Eng Tat Low, an emerging-market sovereign analyst at Columbia Threadneedle in Singapore. “Their fiscal health will take a hit from it.”

The catastrophic flooding in Pakistan’s history has killed more than 1,300 people and is estimated to cause $10 billion in damages to the economy.

The government has slashed its growth forecast for this fiscal year to 2.3% from 5% in June, saying the floods which have inundated a third of the country have intensified the nation’s economic crisis.