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Friday Mar 26 2021

PTI government considering issuing Eurobond to raise up to $1 billion

  • Finance Ministry tells top govt officials that it plans to issue Eurobond in the international capital market during this week. 
  • Sources say size of Eurobond is to be determined based on the appetite of the international market.
  • Interestingly PTI was against the issuance of international bonds when it was in the Opposition.

ISLAMABAD: As the International Monetary Fund programme gets back on track, the government is mulling issuing a Eurobond in the international capital market in the coming days with the hopes of generating $750 million to $1 billion, reports The News.

If all goes as planned, it will be the first such transaction in the PTI’s tenure that will seek to put Pakistan back on the radar of international lenders.

Read more: Pakistan raises $2.5 billion through Sukuk, Eurobond

After facing stiff opposition from the cabinet over placing Islamabad's F-9 Park as an asset guarantee for a planned asset-backed Sukuk bond, the Ministry of Finance ultimately decided to go ahead with a Eurobond because it could be launched with the help of a sovereign guarantee instead.

The Ministry of Finance in a letter sent to the State Bank governor, CPEC Authority chairman, Federal Board of Revenue, Ministry of Foreign Affairs, Power Division, Petroleum Division, Privatisation Commission, Board of Investment, Ministry of Planning and Attorney General of Pakistan indicated that it plans to issue a Eurobond in the international capital market during this week. It added that a global announcement on the matter will take place shortly.

“The size of the Eurobond has not yet been firmed up as it will be determined keeping in view the appetite of the international market, but there are indications that Islamabad may opt to go ahead with launching a Eurobond worth $1 billion,” sources told The News on Thursday.

Under the plan, the government's financial advisors will hold in-house deliberations to finalise a strategy for narrating Pakistan’s economic story in front of international investors.

Read more: Govt retired more than $10 billion in debt in 2019-2020, documents show

Increasing political turmoil might increase headaches for the government on the economic front in months ahead. To achieve Net International Reserves (NIR) targets under the IMF condition, the State Bank of Pakistan has to jack up foreign currency reserves quarterly.

The building up of foreign currency reserves is the major target under the IMF programme, so the government will have to depend upon the rollover of loans and raising of billions of dollars through the issuance of international bonds in months to come.